- 


THE 


FEDERAL  RESERVE  ACT 

(APPROVED  DECEMBER  23,  1913) 

AS  AMENDED 

August  4,  1914;  August  15,  1914;  March  3,  1915 

September  7,  1916;  June  21,  1917;   September  26,  1918 

March  3,  1919;  September  17,  1919;  December  24,  1919 

April  13,  1920 

With  an  appendix  containing  certain  sections  of  the  following  Acts  of  Congress  which  affect, 
directly  or  indirectly,  the  operations  of  Federal  Reserve  Banks  and  memlicr  banks 

CLAYTON  ANTI-TRUST  ACT,  approved  October  15, 1914,  as  amended 
by  Kern  Amendment,  approved  May  15,  1916,  as  amended  by  the  act 
approved  May  26,  1920 

AMENDMENT  TO  POSTAL  SAVINGS  ACT,  approved  May  18,  1916 

FARM  LOAN  ACT,  approved  July  17,  1916 

FIRST  LIBERTY  BOND  ACT,  approved  April  24,  1917 

SECOND  LIBERTY  BOND  ACT,  approved  September  24,  1917 

THIRD  LIBERTY  BOND  ACT,  approved  April  4,  1918 

WAR  FINANCE  CORPORATION  ACT,  approved  April  5,  1918,  as 
amended  by  the  Victory  Liberty  Loan  Act,  approved  March  3,  1919 

AN  ACT  TO  CONSERVE  THE  GOLD  SUPPLY  OF  THE  UNITED 
STATES,  ETC.,  approved  April  23,  1918 

TRADING  WITH  THE  ENEMY  ACT,  as  amended  by  the  act  approved 
September  24,  1918 

SECTION  5172,  REVISED  STATUTES,  as  amended  by  act  of  March 
3,1919 

SECTION  5200,  REVISED  STATUTES,  as  amended  by  act  of  Septem- 
ber 24,  1918,  and  act  of  October  22,  1919 

SECTION  5202,  REVISED  STATUTES,  as  amended  by  War  Finance 
Corporation  Act,  approved  April  5,  1918,  and  act  of  October  22,  1919 

SECTIONS  5208  AND  5209,  REVISED  STATUTES,  as  amended  by 
act  of  September  26,  1918 

REVENUE  ACT  OF  1918,  approved  February  24,  1919 

TRANSPORTATION  ACT  OF  1920,  approved  February  28,  1920 

APPROPRIATION  ACT  OF  1920,  approved  May  29,  1920 

COMPILED  UNDER  DIRECTION  OF 
THE  FEDERAL  RESERVE  BOARD 


3^  I  S3 

WASHINGTON 
GOVERNMENT   PRINTING  OFFICE 

1920 
I 1 


SOUTHERN    BRANCH 

UNIVERSITY  of  « 


LOS  ANGELES,  CALIF. 


-o 


FEDERAL  RESERVE  ACT. 

(Approved  Dec.  23,  1913.) 

As  amended  Aug.  4,  1914  (38  Slat.,  682,  Chap.  225);  Aug.  15,  1914  (38  Stat.,  691, 
Chap.  252);  Mar.  3,  1915  (38  Stat.,  958,  Chap.  93);  Sept.  7,  1916  (39  Stat.,  752, 
Chap.  461);  June  21,  1917  (40  Stat.,  232,  Chap.  32);  Sept.  26,  1918;  Mar.  3,  1919; 
Sept.  17,  1919;  Dec.  24,  1919;  Apr.  13,  1920. 

An  Act  To  provide  for  the  establishment  of  Federal  reserve  banks, 
to  furnish  an  elastic  cm-rency,  to  afford  means  of  rediscounting  com- 
mercial paper,  to  establish  a  more  effective  supervision  of  banking  in 
the  United  States,  and  for  other  purposes. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assemble! , 
That  the  short  title  of  this  Act  shall  be  the  "Federal 
Reserve  Act." 

Wherever  the  word  ''bank''  is  used  in  this  Act,  the 
word  shall  be  held  to  include  State  bank,  banking  asso- 
ciation, and  trust  compaii}',  except  where  national  banks 
or  Federal  reserve  banks  are  specifically  referred  to. 

The  terms  "national  bank*'  and  "national  banking 
association"  used  in  this  Act  shall  be  held  to  be  synony- 
mous and  interchangeable.  The  term  "member  bank" 
shall  be  held  to  mean  any  national  bank,  State  bank,  or 
bank  or  trust  company  which  has  become  a  member  of 
one  of  the  reserve  banks  created  by  this  Act.  The  term 
"board"  shall  be  held  to  mean  Federal  Reserve  Board; 
the  term  "district"  shall  be  held  to  mean  Federal  reserve 
district;  the  term  "reserve  bank"  shall  be  held  to  moan 
Federal  reserve  bank. 

FEDERAL   RESERVE   DISTRICTS. 

Sec.  2.  As  soon  as  practicable,  the  Secretary  of  the 
Treasury,  the  Secretary  of  Agriculture  and  the  Comptroller 
of  the  Currency,  acting  as  "The  Reserve  Bank  Organi- 
zation Committee,"  shall  designate  not  less  than  eight 
nor  more  than  twelve  cities  to  be  known  as  Federal  re- 
serve cities,  and  shall  divide  the  continental  United 
States,  excluding  Alaska,  into  districts,  each  district  to 
contain  only  one  of  such  Federal  reserve  cities.  The  de- 
termination of  said  organization  committee  shall  not  be 
subject  to  review  except  by  the  Federal  Reserve  Board 
when   organized:  Provided,   That   the   districts  shall  be 

3 


7 


THE   FEDERAL   RESERVE   ACT.  Sec.  2. 

apportioned  with  duo  regard  to  the  convenience  and  cus- 
tomary course  of  business  and  shall  not  necessarily  be 
coterminous  with  any  State  or  States.  The  districts 
thus  created  may  be  readjusted  and  new  districts  may 
from  time  to  time  be  created  by  the  Federal  Reserve 
Board,  not  to  exceed  twelve  hi  all.  Such  districts  shall 
be  known  as  Federal  reserve  districts  and  may  bo  desig- 
nated by  number.  A  majority  of  the  organization  com- 
mittee shall  constitute  a  quorum  with  authority  to  act. 

Said  organization  committee  shall  be  authorized  to 
employ  counsel  and  expert  aid,  to  take  testimony,  to  send 
for  persons  and  papers,  to  administer  oaths,  and  to  make 
such  investigation  as  may  be  deemed  necessary  by  the 
said  committee  in  determining  the  reserve  districts  and 
in  designating  the  cities  within  such  districts  where  such 
Federal  reserve  banks  shall  be  severally  locatod.  The 
said  committee  shall  supervise  the  organization  in  each 
of  the  cities  designated  of  a  Federal  reserve  bank,  which 
shall  include  in  its  title  the  name  of  the  city  in  which  it  is 
situated,  as  "Federal  Reserve  Bank  of  Chicago." 

Under  regulations  to  be  prescribed  by  the  organization 
committee,  every  national  banking  association  in  the 
United  States  is  hereby  required,  and  every  eligible  bank 
in  the  United  States  and  every  trust  company  within  the 
District  of  Columbia,  is  hereby  authorized  to  signify  in 
writing,  within  sixty  days  after  the  passage  of  this  Act, 
its  acceptance  of  the  terms  and  provisions  hereof.  When 
the  organization  committee  shall  have  designated  the 
cities  in  which  Federal  reserve  banks  are  to  be  organized, 
and  fixed  the  geographical  limits  of  the  Federal  reserve 
districts,  every  national  banking  association  within  that 
district  shall  be  required  within  thirty  days  after  notice 
from  the  organization  committee,  to  subscribe  to  the 
capital  stock  of  such  Federal  reserve  bank  in  a  sum  equal 
to  six  per  centum  of  the  paid-up  capital  stock  and  surplus 
of  such  bank,  one-sixth  of  the  subscription  to  be  payable 
on  call  of  the  organization  committee  or  of  the  Federal 
Reserve  Board,  one-sixth  within  throe  months  and  one- 
sixth  within  six  months  thereafter,  and  the  remainder  of 
the  subscription,  or  any  part  thereof,  shall  bo  subject  to 
call  when  doomed  necessary  by  the  Federal  Reserve 
Board,  said  payments  to  bo  in  gold  or  gold  certificates. 

The  shareholders  of  every  Federal  reserve  bank  shall  be 
held  individually  responsible,  equally  and  ratably,  and  not 


tec.  2.  CHE    FEDERAL    RESERVE    ACT. 

ono  for  another,  for  all  contracts,  debts,  and  engagements 
of  such  bank  to  the  extent  of  the  amount  of  their  sub- 
scriptions to  such  stock  at  tho  par  value  thereof  in  addi- 
tion to  the  amount  subscribed,  whether  such  subscrip- 
tions have  been  paid  up  in  whole  or  in  part,  under  the 
provisions  of  this  Act. 

Any  national  bank  failing  to  signify  its  acceptance  of 
the  terms  of  this  Act  within  the  sixty  days  aforesaid, 
shall  cease  to  act  as  a  reserve  agent,  upon  thirty  days' 
notice,  to  be  given  within  the  discretion  of  the  said  or- 
ganization committee  or  of  the  Federal  Kcserve  Board. 

Should  any  national  banking  association  in  the  United 
States  now  organized  fail  within  one  year  after  the  pas- 
sage of  this  Act  to  become  a  member  bank  or  fail  to  com- 
ply with  any  of  the  provisions  of  this  Act  applicable 
thereto,  all  of  the  rights,  privileges,  and  franchises  of 
such  association  granted  to  it  under  the  national-bank 
Act,  or  under  the  provisions  of  this  Act,  shall  be  thereby- 
forfeited.  Any  noncompliance  with  or  violation  of  this 
Act  shall,  however,  be  determined  and  adjudged  by  any 
court  of  the  United  States  of  competent  jurisdiction  in  a 
suit  brought  for  that  purpose  in  the  district  or  territory  in 
which  such  bank  is  located,  under  direction  of  the  Federal 
Reserve  Board,  by  the  Comptroller  of  the  Currency  in 
his  own  name  before  the  association  shall  be  declared 
dissolved.  In  cases  of  such  noncompliance  or  violation, 
other  than  the  failure  to  become  a  member  bank  under 
the  provisions  of  this  Act,  every  director  who  participated 
in  or  assented  to  the  same  shall  be  held  liable  in  his  per- 
sonal or  individual  capacity  for  all  damages  which  said 
bank,  its  shareholders,  or  any  other  person  shall  have 
sustained  in  consequence  of  such  violation. 

Such  dissolution  shall  not  take  away  or  impair  any 
remedy  against  such  corporation,  its  stockholders  or 
officers,  for  any  liability  or  penalty  which  shall  have 
been  previously  incurred. 

Should  the  subscriptions  by  banks  to  the  stock  of  said 
Federal  reserve  banks  or  any  one  or  more  of  them  be,  in 
tho  judgment  of  the  organization  committee,  insufficient 
to  provide  the  amount  of  capital  required  therefor,  then 
and  in  that  event  tho  said  organization  committee  may, 
under  conditions  and  regulations  to  be  prescribed  by  it, 
offer  to  public  subscription  at  par  such  an  amount  of 
stock  in  said  Federal  reserve  banks,  or  any  one  or  more 


THE   FEDEEAL  RESERVE   ACT.  Sec.  2. 

of  them,  as  said  committee  shall  determine,  subject  to 
the  same  conditions  as  to  payment  and  stock  liability 
as  provided  for  member  banks. 

No  individual,  copartnership,  or  corporation  other 
than  a  member  bank  of  its  district  shall  be  permitted  to 
subscribe  for  or  to  hold  at  any  time  more  than  $25,000 
par  value  of  stock  in  any  Federal  reserve  bank.  Such 
stock  shall  be  known  as  public  stock  and  may  be  trans- 
ferred on  the  books  of  the  Federal  reserve  bank  by  the 
chairman  of  the  board  of  directors  of  such  bank. 

Should  the  total  subscriptions  by  banks  and  the  public 
to  the  stock  of  said  Federal  reserve  banks,  or  any  one  or 
more  of  them,  be,  in  the  judgment  of  the  organization 
committee,  insufficient  to  provide  the  amount  of  capital 
required  therefor,  then  and  in  that  event  the  said  organi- 
zation committee  shall  allot  to  the  United  States  such  an 
amount  of  said  stock  as  said  committee  shall  determine. 
Said  United  States  stock  shall  be  paid  for  at  par  out  of 
any  money  in  the  Treasury  not  otherwise  appropriated, 
and  shall  be  held  by  the  Secretary  of  the  Treasury  and 
disposed  of  for  the  benefit  of  the  United  States  in  such 
manner,  at  such  times,  and  at  such  price,  not  less  than 
par,  as  the  Secretary  of  the  Treasury  shall  determine. 

Stock  not  held  by  member  banks  shall  not  be  entitled 
to  voting  power. 

The  Federal  Reserve  Board  is  hereby  empowered  to 
adopt  and  promulgate  rules  and  regulations  governing 
the  transfers  of  said  stock. 

No  Federal  reserve  bank  shall  commence  business  with 
a  subscribed  capital  less  than  $4,000,000.  The  organiza- 
tion of  reserve  districts  and  Federal  reserve  cities  shall 
not  be  construed  as  changing  the  present  status  of  reserve 
cities  and  central  reserve  cities,  except  in  so  far  as  this 
Act  changes  the  amount  of  reserves  that  may  be  carried 
with  approved  reserve  agents  located  therein.  The  or- 
ganization committee  shall  have  power  to  appoint  such 
assistants  and  incur  such  expenses  in  carrying  out  the 
provisions  of  this  Act  as  it  shall  deem  necessary,  and  such 
expenses  shall  be  payable  by  the  Treasurer  of  the  United 
States  upon  voucher  approved  by  the  Secretary  of  the 
Treasury,  and  the  sum  of  $100,000,  or  so  much  thereof  as 
may  be  necessary,  is  hereby  appropriated,  out  of  any 
moneys  in  the  Treasury  not  otherwise  appropriated,  for 
the  payment  of  such  expenses. 


Secs.  3,  4.  THE   FEDERAL   RESERVE   ACT. 

BRANCH    OFFICES. 


Sec 
requir 


c.  3.  The  Federal  Reserve  Board  may  permit  or  Asamendedtj 
ire  any  Federal  reserve  bank  to  establish  branch  June  »,  i»i7  (« 
banks  within  the  Federal  reserve  district  in  which  it  is 
located  or  within  the  district  of  any  Federal  reserve 
bank  which  may  have  been  suspended.  Such  branches, 
subject  to  such  rules  and  regulations  as  the  Federal  Re- 
serve Board  may  prescribe,  shall  be  operated  under  the 
supervision  of  a  board  of  directors  to  consist  of  not  more 
than  seven  nor  less  than  three  directors,  of  whom  a 
majority  of  one  shall  be  appointed  by  the  Federal  reserve 
bank  of  the  district,  and  the  remaining  directors  by  the 
Federal  Reserve  Board.  Directors  of  branch  banks 
shall  hold  office  during  the  pleasure  of  the  Federal  Re- 
serve Board. 

FEDERAL  RESERVE  BANKS. 

Sec.  4.  "When  the  organization   committee  shall  have    As  amended  by 

ii-i       l-r^i         i  t        •  -ii-  act  approved 

established  federal  reserve  districts  as  provided  in  sec- June  21,  1917  ao 
tion  two  of  this  Act,  a  certificate  shall  be  filed  with  the32);'  act   a  p.' 

~.  ■,-,  ,    .,         ~.  ,  .         proved    Septem- 

Comptroller  oi  the  Currency  showing  the  geographical  <*r  26,  wis. 
limits  of  such  districts  and  the  Federal  reserve  city 
designated  in  each  of  such  districts.  The  Comptroller  of 
the  Currency  shall  thereupon  cause  to  be  forwarded  to 
each  national  bank  located  in  each  district,  and  to  such 
other  banks  declared  to  be  eligible  by  the  organization 
committee  which  may  apply  therefor,  an  application 
blank  in  form  to  be  approved  by  the  organization  com- 
mittee, which  blank  shall  contain  a  resolution  to  be 
adopted  by  the  board  of  directors  of  each  bank  executing 
such  application,  authorizing  a  subscription  to  the  capi- 
tal stock  of  the  Federal  reserve  bank  organizing  in  that 
district  in  accordance  with  the  provisions  of  this  Act. 

When  the  minimum  amount  of  capital  stock  prescribed 
by  this  Act  for  the  organization  of  any  Federal  reserve 
bank  shall  have  been  subscribed  and  allotted,  the  organi- 
zation committee  shall  designate  any  five  banks  of  those 
whose  applications  have  been  received,  to  execute  a  cer- 
tificate of  organization,  and  thereupon  the  banks  so  des- 
ignated shall,  under  their  seals,  make  an  organization 
certificate  which  shall  specifically  state  the  name  of  such 
Federal  reserve  bank,  the  territorial  extent  of  the  district 
over  which  the  operations  of  such  Federal  reserve  bank 
are  to  be  carried  on,  the  city  and  State  in  which  said  bank 


THE   FEDERAL   RESERVE   ACT.  Sec.  -L 

is  to  be  located,  the  amount  of  capital  stock  and  the  num- 
ber of  shares  into  which  the  same  is  divided,  the  name 
and  place  of  doing  business  of  each  bank  executing  such 
certificate,  and  of  all  banks  which  have  subscribed  to  the 
capital  stock  of  such  Federal  reserve  bank  and  the  num- 
ber of  shares  subscribed  by  each,  and  the  fact  that  the 
certificate  is  made  to  enable  those  banks  executing  same, 
and  all  banks  which  have  subscribed  or  may  thereafter 
subscribe  to  the  capital  stock  of  such  Federal  reserve 
bank,  to  avail  themselves  of  the  advantages  of  this  Act. 

The  said  organization  certificate  shall  be  acknowledged 
before  a  judge  of  some  court  of  record  or  notary  public; 
and  shall  be,  together  with  the  acknowledgment  thereof, 
authenticated  by  the  seal  of  such  court,  or  notary,  trans- 
mitted to  the  Comptroller  of  the  Currency,  who  shall  file, 
record  and  carefully  preserve  the  same  in  his  office. 

Upon  the  filing  of  sUch  certificate  with  the  Comptroller 
of  the  Currency  as  aforesaid,  the  said  Federal  reserve  bank 
shall  become  a  body  corporate,  and  as  such,  and  in  the 
name  designated  in  such  organization  certificate,  shall 
have  power — 

First.  To  adopt  and  use  a  corporate  seal. 

Second.  To  have  succession  for  a  period  of  twenty  years 
from  its  organization  unless  it  is  sooner  dissolved  by  an 
Act  of  Congress,  or  unless  its  franchise  becomes  forfeited 
by  some  violation  of  law. 

Third.  To  make  contracts. 

Fourth.  To  sue  and  be  sued,  complain  and  defend,  in 
any  court  of  law  or  equity. 

Fifth.  To  appoint  by  its  board  of  directors  such  officers 
and  employees  as  are  not  otherwise  provided  for  in  this 
Act,  to  define  their  duties,  require  bonds  of  them  and  fix 
the  penalty  thereof,  and  to  dismiss  at  pleasure  such  offi- 
cers or  employees. 

Sixth.  To  prescribe  by  its  board  of  directors,  by-laws 
not  inconsistent  with  law,  regulating  the  manner  in  which 
its  general  business  may  be  conducted,  and  the  privileges 
granted  to  it  by  law  may  be  exercised  and  enjoyed. 

Seventh.  To  exercise  by  its  board  of  directors,  or 
duly  authorized  officers  or  agents,  all  powers  specifically 
granted  by  the  provisions  of  this  Act  and  such  incidental 
powers  as  shall  be  necessary  to  carry  on  the  business  of 
banking  within  the  limitations  prescribed  by  this  Act. 


Sec.  4.  THE   FEDERAL   RESERVE   ACT. 

Eighth.1  Upon  deposit  with  the  Treasurer  of  the 
United  States  of  any  bonds  of  the  United  States  in  the 
manner  provided  by  existing  law  relating  to  national 
banks,  to  receive  from  the  Comptroller  of  the  Currency 
circulating  notes  in  blank,  registered  and  countersigned 
as  provided  by  law,  equal  in  amount  to  the  par  value  of 
the  bonds  so  deposited,  such  notes  to  be  issued  under  the 
same  conditions  and  provisions  of  law  as  relate  to  the 
issue  of  circulating  notes  of  national  banks  secured  by 
bonds  of  the  United  States  bearing  the  circulating  priv- 
ilege, except  that  the  issue  of  such  notes  shall  not  be 
limited  to  the  capital  stock  of  such  Federal  reserve  bank. 

But  no  Federal  reserve  bank  shall  transact  any  busi- 
ness except  such  as  is  incidental  and  necessarily  prelimi- 
nary to  its  organization  until  it  has  been  authorized  by 
the  Comptroller  of  the  Currency  to  commence  business 
under  the  provisions  of  this  Act. 

Every  Federal  reserve  bank  shall  be  conducted  under 
the  supervision  and  control  of  a  board  of  directors. 

The  board  of  directors  shall  perform  the  duties  usually 
appertaining  to  the  office  of  directors  of  banking  associa- 
tions and  all  such  duties  as  are  prescribed  by  law. 

Said  board  shall  administer  the  affairs  of  said  bank 
fairly  and  impartially  and  without  discrimination  in 
favor  of  or  against  any  member  bank  or  banks  and  shall, 
subject  to  the  provisions  of  law  and  the  orders  of  the 
Federal  Reserve  Board,  extend  to  each  member  bank 
such  discounts,  advancements  and  accommodations  as 
may  be  safely  and  reasonably  made  with  due  regard  for 
the  claims  and  demands  of  other  member  banks. 

Such  board  of  directors  shall  be  selected  as  hereinafter 
specified  and  shall  consist  of  nine  members,  holding  office 
for  three  years,  and  divided  into  three  classes,  designated 
as  classes  A,  B,  and  C. 

Class  A  shall  consist  of  three  members,  who  shall  be 
chosen  by  and  be  representative  of  the  stock-holding 
banks. 

Class  B  shall  consist  of  three  members,  who  at  the  time 
of  their  election  shall  be  actively  engaged  in  their  district 
in  commerce,  agriculture  or  some  other  industrial  pursuit. 

Class  C  shall  consist  of  three  members  who  shall  be 
designated  by  the  Federal  Reserve  Board.     When  the 

i  See  section  18.  Also  sec.  5  of  act  approved  Apr.  23, 1918,  appendix,  p.  73,  authorizing 
issuance  of  Federal  Reserve  Bank  notes  in  any  denominations  (including  $1  and  $2) 
against  security  of  United  States  certificates  of  indebtedness,  or  of  United  States  one- 
year  gold  notes. 


10  THE   FEDERAL   RESERVE   ACT.  Sec.  4. 

necessary  subscriptions  to  the  capital  stock  have  been 
obtained  for  the  organization  of  any  Federal  reserve 
bank,  the  Federal  Reserve  Board  shall  appoint  the  class 
C  directors  and  shall  designate  one  of  such  directors  as 
chairman  of  the  board  to  be  selected.  Pending  the 
designation  of  such  chairman,  the  orgar.ization  committee 
shall  exercise  the  powers  and  duties  appertaining  to  the 
office  of  chairman  in  the  organization  of  such  Federal 
reserve  bank. 

No  Senator  or  Representative  in  Congress  shall  be  a 
member  of  the  Federal  Reserve  Board  or  an  officer  or  a 
director  of  a  Federal  reserve  bank. 

No  director  of  class  B  shall  be  an  officer,  director,  or 
employee  of  any  bank. 

No  director  of  class  C  shall  be  an  officer,  director, 
employee,  or  stockholder  of  any  bank. 

Directors  of  class  A  and  class  B  shall  be  chosen  in  the 
following  manner: 

The  Federal  Reserve  Board  shall  classify  the  member 
banks  of  the  district  into  three  general  groups  or  divi- 
sions, designating  each  group  by  number.  Each  group 
shall  consist  as  nearly  as  may  be  of  banks  of  similar 
capitalization.  Each  member  bank  shall  be  permitted  to 
nominate  to  the  chairman  of  the  board  of  directors  of 
the  Federal  reserve  bank  of  the  district  one  candidate  for 
director  of  class  A  and  one  candidate  for  director  of  class 
B.  The  candidates  so  nominated  shall  be  listed  by  the 
chairman,  indicating  by  whom  nominated,  and  a  copy  of 
said  list  shall,  within  fifteen  days  after  its  completion,  be 
furnished  by  the  chairman  to  each  member  bank.  Each 
member  bank  by  a  resolution  of  the  board  or  by  an 
amendment  to  its  by-laws  shall  authorize  its  president, 
cashier,  or  some  other  officer  to  cast  the  vote  of  the  mem- 
ber bank  in  the  elections  of  class  A  and  class  B  directors. 

Within  fifteen  days  after  receipt  of  the  list  of  candi- 
dates the  duly  authorized  officer  of  a  member  bank  shall 
certify  to  the  chairman  his  first,  second,  and  other 
choices  for  director  of  class  A  and  class  B,  respectively, 
upon  a  preferential  ballot  upon  a  form  furnished  by  the 
chairman  of  the  board  of  directors  of  the  Federal  reserve 
bank  of  the  district.  Each  such  officer  shall  make  a 
cross  opposite  the  name  of  the  first,  second,  and  other 
choices  for  a  director  of  class  A  and  for  a  director  of  class 
B,  but  shall  not  vote  more  than  one  choice  for  any  one 
candidate.     No  officer  or  director  of  a  member  bank  shall 


Sec.  4.  THE   FEDERAL   RESERVE   ACT.  11 

be  eligible  to  serve  as  a  class  A  director  unless  nominated 
and  elected  by  banks  which  are  members  of  the  same 
group  as  the  member  bank  of  which  he  is  an  officer  or 
director. 

Any  person  who  is  an  officer  or  director  of  more  than 
one  member  bank  shall  not  be  eligible  for  nomination  as 
a  class  A  director  except  by  banks  in  the  same  group  as 
the  bank  having  the  largest  aggregate  resources  of  any 
of  those  of  which  such  person  is  an  officer  or  director. 

Any  candidate  having  a  majority  of  all  votes  cast  in 
the  column  of  first  choice  shall  be  declared  elected.  If 
no  candidate  have  a  majority  of  all  the  votes  in  the  first 
column,  then  there  shall  be  added  together  the  votes  cast 
by  the  electors  for  such  candidates  in  the  second  column 
and  the  votes  cast  for  the  several  candidates  in  the  first 
column.  If  any  candidate  then  have  a  majority  of  the 
electors  voting,  by  adding  together  the  first  and  second 
choices,  he  shall  be  declared  elected.  If  no  candidate 
have  a  majority  of  electors  voting  when  the  first  and 
second  choices  shall  have  been  added,  then  the  votes  cast 
in  the  third  column  for  other  choices  shall  be  added  to- 
gether in  like  manner,  and  the  candidate  then  having  the 
highest  number  of  votes  shall  be  declared  elected.  An 
immediate  report  of  election  shall  be  declared. 

Class  C  directors  shall  be  appointed  by  the  Federal 
Reserve  Board.  They  shall  have  been  for  at  least  two 
years  residents  of  the  district  for  which  they  are  ap- 
pointed, pne  of  whom-s-hall  be  deshru a  Led  -tw-^ftid-hoard- 
as_  chairman  of—the- board  -of- directors  of  the ~FedeTair' 
reserve  hfmk_jmd  as  "Inderal  r^s^rv*  agent  "  He  shall 
be  a  person  of  tested  banking  experience,  and  in  addition 
to  his  duties  as  chairman  of  the  board  of  directors  of  the 
Federal  reserve  bank  he  shall  be  required  to  maintain, 
under  regulations  to  be  established  by  the  Federal 
Reserve  Board,  a  local  office  of  said  board  on  the  prem- 
ises of  the  Federal  reserve  bank.  He  shall  make  regular 
reports  to  the  Federal  Reserve  Board  and  shall  act  as  its 
official  representative  for  the  performance  of  the  functions 
conferred  upon  it  by  this  act.  He  shall  receive  an  annual 
compensation  to  be  fixed  by  the  Federal  Reserve  Board 
and  paid  monthly  by  the  Federal  reserve  bank  to  which 
he  is  designated.  One  of  the  directors  of  class  C  shall  be 
appointed  by  the  Federal  Reserve  Board  as  deputy 
chairman  to  exercise  the  powers  of  the  chairman  of  the 
board  when  necessary.     In  case  of  the  absence  of  the 


12  THE   FEDEBAL  RESERVE   ACT.  Sbc.  4. 

chairman  and  deputy  chairman,  the  third-class  C  director 
shall  preside  at  meetings  of  the  board. 

Subject  to  the  approval  of  the  Federal  Reserve  Board 
the  Federal  reserve  agent  shall  appoint  one  or  more, 
assistants.  Such  assistants,  who  shall  be  persons  of 
tested  banking  experience,  shall  assist  the  Federal  reserve 
agent  in  the  performance  of  his  duties  and  shall  also  have 
power  to  act  in  his  name  and  stead  during  his  absence  or 
disability.  The  Federal  Reserve  Board  shall  require 
such  bonds  of  the  assistant  Federal  reserve  agents  as  it 
may  deem  necessary  for  the  protection  of  the  United 
States.  Assistants  to  the  Federal  reserve  agent  shall 
receive  an  annual  compensation,  to  be  fixed  and  paid  in 
the  same  manner  as  that  of  the  Federal  reserve  agent. 

Directors  of  Federal  reserve  banks  shall  receive,  in 
addition  to  any  compensation  otherwise  provided,  a 
reasonable  allowance  for  necessary  expenses  in  attending 
meetings  of  their  respective  boards,  which  amount  shall 
be  paid  by  the  respective  Federal  reserve  banks.  Any 
compensation  that  may  be  provided  by  boards  of  di- 
rectors of  Federal  reserve  banks  for  directors,  officers  or 
employees  shall  be  subject  to  the  approval  of  the  Federal 
Reserve  Board. 

The  Reserve  Bank  Organization  Committee  may,  in 
organizing  Federal  reserve  banks,  call  such  meetings  of 
bank  directors  in  the  several  districts  as  may  be  necessary 
to  carry  out  the  purposes  of  this  Act,  and  may  exercise 
the  functions  herein  conferred  upon  the  chairman  of  the 
board  of  directors  of  each  Federal  reserve  bank  pending 
the  complete  organization  of  such  bank. 

At  the  first  meeting  of  the  full  board  of  directors  of  each 
Federal  reserve  bank,  it  shall  be  the  duty  of  the  directors 
of  classes  A,  B  and  C,  respectively,  to  designate  one  of  the 
members  of  each  class  whose  term  of  office  shall  expire 
in  one  year  from  the  first  of  January  nearest  to  date  of 
such  mooting,  one  whose  term  of  office  shall  expire  at  the 
end  of  two  years  from  said  date,  and  one  whose  term  of 
office  shall  expire  at  the  end  of  three  years  from  said  date. 
Thereafter  every  director  of  a  Federal  reserve  bank; 
chosen  as  hereinbefore  provided  shall  hold  office  for  a 
term  of  throe  3^ears.  Vacancies  that  may  occur  in  the 
several  classes  of  directors  of  Federal  reserve  banks  may 
be  filled  in  the  manner  provided  for  the  original  selection 
of  such  directors,  such  appointees  to  hold  office  for  the 
unexpired  terms  of  their  predecessors. 


Sec.  5.  THE   FEDERAL   RESERVE   ACT.  13 

STOCK    ISSUES;    INCREASE    AND    DECREASE    OF    CAPITAL. 

Sec.  5.  The  capital  stock  of  each  Federal  reserve  bank 
shall  be  divided  into  shares  of  $100  each.  Tho  out- 
standing capital  stock  shall  bo  increased  from  time  to 
time  as  member  banks  increase  their  capital  stock  and 
surplus  or  as  additional  banks  become  members,  and 
may  bo  decreased  as  member  banks  reduco  their  capital 
stock  or  surplus  or  cease  to  be  members.  Shares  of  the 
capital  stock  of  Federal  reserve  banks  owned  by  mombor 
banks  shall  not  be  transferred  or  hypothecated.  When 
a  member  bank  increases  its  capital  stock  or  surplus, 
it  shall  thereupon  subscribe  for  an  additional  amount 
of  capital  stock  of  the  Federal  reserve  bank  of  its  dis- 
trict equal  to  six  per  centum  of  the  said  increase,  one- 
half  of  said  subscription  to  be  paid  in  the  manner  herein- 
before provided  for  original  subscription,  and  one-half 
subject  to  call  of  the  Federal  Reserve  Board.  A  bank 
applying  for  stock  in  a  Federal  reserve  bank  at  any 
time  after  the  organization  thereof  must  subscribe  for 
an  amount  of  the  capital  stock  of  the  Federal  reserve 
bank  equal  to  six  per  centum  of  the  paid-up  capital 
stock  and  surplus  of  said  applicant  bank,  paying  therefor 
its  par  value  plus  one-half  of  one  per  centum  a  month 
from  the  period  of  the  last  dividend.  When  the  capital 
stock  of  any  Federal  reserve  bank  shall  have  been  in- 
creased either  on  account  of  the  increase  of  capital  stock 
of  member  banks  or  on  account  of  the  increase  in  the 
number  of  member  banks,  the  board  of  directors  shall 
cause  to  be  executed  a  certificate  to  the  Comptroller  of 
the  Currency  showing  the  increase  in  capital  stock,  the 
amount  paid  in,  and  by  whom  paid.  When  a  member 
bank  reduces  its  capital  stock  it  shall  surrender  a  pro- 
portionate amount  of  its  holdings  in  the  capital  of  said 
Federal  reserve  banK,  and  when  a  member  bank  volun- 
tarily liquidates  it  shall  surrender  all  of  its  holdings  of 
the  capital  stock  of  said  Federal  reserve  bank  and  be 
released  from  its  stock  subscription  not  previously 
called.  In  either  case  the  shares  surrendered  shall  be 
canceled  and  the  member  bank  shall  receive  in  payment 
therefor,  under  regulations  to  be  prescribed  by  the 
Federal  Reserve  Board,  a  sum  equal  to  its  cash-paid 
subscriptions  on  the  shares  surrendered  and  one-half 
of  one  per  centum  a  month  from  the  period  of  the  last 
dividend,   not  to    exceed    the  book  value   thereof,    less 


14  THE   FEDERAL   RESERVE   ACT.  Secs.  G,  7. 

any  liability  of  such  member  bank  to  the  Federal  reserve 
bank. 

Sec.  6.  If  any  member  bank  shall  be  declared  insol- 
vent and  a  receiver  appointed  therefor,  the  stock  held 
by  it  in  said  Federal  reserve  bank  shall  be  canceled,  with- 
out impairment  of  its  liability,  and  all  cash-paid  sub- 
scriptions on  said  stock,  with  one-half  of  one  per  centum 
per  month  from  the  period  of  last  dividend,  not  to  exceed 
the  book  value  thereof,  shall  be  first  applied  to  all  debts 
of  the  insolvent  member  bank  to  the  Federal  reserve 
bank,  and  the  balance,  if  any,  shall  be  paid  to  the  re- 
ceiver of  the  insolvent  bank.  Whenever  the  capital 
stock  of  a  Federal  reserve  bank  is  reduced,  either  on 
account  of  a  reduction  in  capital  stock  of  any  member 
bank  or  of  the  liquidation  or  insolvency  of  such  bank, 
the  board  of  directors  shall  cause  to  be  executed  a  cer- 
tificate to  the  Comptroller  of  the  Currency  showing  such 
reduction  of  capital  stock  and  the  amount  repaid  to 
such  bank. 

DIVISION    OF    EARNINGS. 

as  amended  by  Sec.  7.  After  all  necessary  expenses  of  a  Federal 
March^  i!ii97e  reserve  bank  have  been  paid  or  provided  for,  the  stock- 
holders shall  be  entitled  to  receive  an  annual  dividend 
of  six  per  centum  on  the  paid-in  capital  stock,  which 
dividend  shall  be  cumulative.  After  the  aforesaid  divi- 
dend claims  have  been  fully  met,  the  net  earnings  shall 
be  paid  to  the  United  States  as  a  franchise  tax  except 
that  the  whole  of  such  net  earnings,  including  those  for 
the  year  ending  December  thirty-first,  nineteen  hundred 
and  eighteen,  shall  be  paid  into  a  surplus  fund  until  it 
shall  amount  to  one  hundred  per  centum  of  the  subscribed 
capital  stock  of  such  bank,  and  that  thereafter  ten  per 
centum  of  such  net  earnings  shall  be  paid  into  the  surplus. 
The  net  earnings  derived  by  the  United  States  from 
Federal  reserve  banks  shall,  in  the  discretion  of  the 
Secretary,  be  used  to  supplement  the  gold  reserve  held 
against  outstanding  United  States  notes,  or  shall  be 
applied  to  the  reduction  of  the  outstanding  bonded 
indebtedness  of  the  United  States  under  regulations 
to  be  prescribed  by  the  Secretary  of  the  Treasury. 
Should  a  Federal  reserve  bank  be  dissolved  or  go  into 
liquidation,  any  surplus  remaining,  after  the  payment 
of  all  debts,  dividend  requirements  as  hereinbefore 
provided,  and  the  par  value  of  the  stock,  shall  be  paid 
to  and  become  the  property  of  the  United  States  and  shall 
be  similarly  applied. 


Sec.  8.  THE   FEDERAL   RESERVE   ACT.  15 

Federal  reserve  banks,  including  the  capital  stock  and 
surplus  therein,  and  the  income  derived  therefrom  shall 
be  exempt  from  Federal,  State,  and  local  taxation, 
except  taxes  upon  real  estate. 

Sec.  8.  Section  fifty-one  hundred  and  fifty-four,  United 
States  Revised  Statutes,  is  hereby  amended  to  read  as 
follows: 

Any  bank  incorporated  by  special  law  of  any  State 
or  of  the  United  States  or  organized  under  the  general 
laws  of  any  State  or  of  the  United  States  and  having  an 
unimpaired  capital  sufficient  to  entitle  it  to  become  a 
national  banking  association  under  the  provisions  of  the 
existing  laws  may,  by  the  vote  of  the  shareholders  owning 
not  less  than  fifty-one  per  centum  of  the  capital  stock  of 
such  bank  or  banking  association,  with  the  approval 
of  the  Comptroller  of  the  Currency  be  converted  into  a 
national  banking  association,  with  any  name  approved 
by  the  Comptroller  of  the  Currency: 

Provided,  however,  That  said  conversion  shall  not  be  in 
contravention  of  the  State  law.  In  such  case  the  articles 
of  association  and  organization  certificate  may  be  exe- 
cuted by  a  majority  of  the  directors  of  the  bank  or  bank- 
ing institution,  and  the  certificate  shall  declare  that 
the  owners  of  fifty-one  per  centum  of  the  capital  stock 
have  authorized  the  directors  to  make  such  certificate 
and  to  change  or  convert  the  bank  or  banking  institution 
into  a  national  association.  A  majority  of  the  directors, 
after  executing  the  articles  of  association  and  the  organi- 
zation certificate,  shall  have  power  to  execute  all  other 
papers  and  to  do  whatever  may  be  required  to  make  its 
organization  perfect  and  complete  as  a  national  associa- 
tion. The  shares  of  any  such  bank  may  continue  to  be 
for  the  same  amount  each  as  they  were  before  the  con- 
version, and  the  directors  may  continue  to  be  directors 
of  the  association  until  others  are  elected  or  appointed  in 
accordance  with  the  provisions  of  the  statutes  of  the 
United  States.  When  the  Comptroller  has  given  to 
such  bank  or  banking  association  a  certificate  that  the 
provisions  of  this  Act  have  been  complied  with,  such 
bank  or  banking  association,  and  all  its  stockholders, 
officers,  and  employees,  shall  have  the  same  powers  and 
privileges,  and  shall  be  subject  to  the  same  duties, 
liabilities,  and  regulations,  in  all  respects,  as  shall  have 
been  prescribed  by  the  Federal  Reserve  Act  and  by  the 


16  THE   FEDERAL  RESERVE  ACT.  Sec.  9. 

national  banking  Act  for  associations  originally  organized 
as  national  banking  associations. 

STATE    BANKS    AS    MEMBERS. 

actSapprdoveI  ^ec.  ®*  ^n7  DanK  incorporated  by  special  law  of  any 
stateI223129,17chap°^ta^e»  or  organized  under  the  general  laws  of  any  State 
32,)  or  of  the  United  States,  desiring  to  become  a  member 

of  the  Federal  Reserve  System,  may  make  application 
to  the  Federal  Reserve  Board,  under  such  rules  and 
regulations  as  it  may  prescribe,  for  the  right  to  subscribe 
to  the  stock  of  the  Federal  reserve  bank  organized  within 
the  district  in  which  the  applying  bank  is  located.  Such 
application  shall  be  for  the  same  amount  of  stock  that 
the  applying  bank  would  be  required  to  subscribe  to  as  a 
national  bank.  The  Federal  Reserve  Board,  subject 
to  such  conditions  as  it  may  prescribe,  may  permit 
the  applying  bank  to  become  a  stockholder  of  such 
Federal  reserve  bank. 

In  acting  upon  such  applications  the  Federal  Reserve 
Board  shall  consider  the  financial  condition  of  the  apply- 
ing bank,  the  general  character  of  its  management,  and 
whether  or  not  the  corporate  powers  exercised  are  con- 
sistent with  the  purposes  of  this  act. 

Whenever  the  Federal  Reserve  Board  shall  permit  the 
applying  bank  to  become  a  stockholder  in  the  Federal 
reserve  bank  of  the  district  its  stock  subscription  shall 
be  payable  on  call  of  the  Federal  Reserve  Board,  and 
stock  issued  to  it  shall  be  held  subject  to  the  provisions 
of  this  act. 

All  banks  admitted  to  membership  under  authority  of 
this  section  shall  be  required  to  comply  with  the  reserve 
and  capital  requirements  of  this  act  and  to  conform  to 
those  provisions  of  law  imposed  on  national  banks  which 
prohibit  such  banks  from  lending  on  or  purchasing  their 
own  stock,  which  relate  to  the  withdrawal  or  impairment 
of  their  capital  stock,  and  which  relates  to  the  payment 
of  unearned  dividends.  Such  banks  and  the  officers, 
agents,  and  employees  thereof  shall  also  be  subject  to  the 
provisions  of  and  to  the  penalties  prescribed  by  section 
fifty-two  hundred  and  nine  of  the  Revised  Statutes,1  and 
shall  bo  required  to  mako  reports  of  condition  and  of  the 
payment  of  dividends  to  the  Federal  reserve  bank  of 
which  they  become  a  member.  Not  less  than  three  of 
such  reports  shall  be  made  annually  on  call  of  the  Federal 

i  For  the  text  of  section  5209  of  the  Revised  Statutes,  see  Appendix,  p.  79. 


Sec.  9.  THE   FEDERAL   RESERVE   ACT.  17 

reserve  bank  on  dates  to  be  fixed  by  the  Federal  Reserve 
Board.  Failure  to  make  such  reports  within  ten  days 
after  the  date  they  are  called  for  shall  subject  the  offend- 
ing bank  to  a  penalty  of  $100  a  day  for  each  day  that  it 
fails  to  transmit  such  report;  such  penalty  to  be  collected 
by  the  Federal  reserve  bank  by  suit  or  otherwise. 

As  a  condition  of  membership  such  banks  shall  likewise 
be  subject  to  examinations  made  by  direction  of  the  Fed- 
eral Reserve  Board  or  of  the  Federal  reserve  bank  by 
examiners  selected  or  approved  by  the  Federal  Reserve 
Board. 

Whenever  the  directors  of  the  Federal  reserve  bank 
shall  approve  the  examinations  made  by  the  State  author- 
ities, such  examinations  and  the  reports  thereof  may  be 
accepted  in  lieu  of  examinations  made  by  examiners 
selected  or  approved  by  the  Federal  Reserve  Board:  Pro- 
vided, however,  That  when  it  deems  it  necessary  the  board 
may  order  special  examinations  by  examiners  of  its  own 
selection  and  shall  in  all  cases  approve  the  form  of  the 
report.  The  expenses  of  all  examinations,  other  than 
those  made  by  State  authorities,  shall  be  assessed  against 
and  paid  by  the  banks  examined. 

If  at  any  time  it  shall  appear  to  the  Federal  Reserve 
Board  that  a  member  bank  has  failed  to  comply  with  the 
provisions  of  this  section  or  the  regulations  of  the  Federal 
Reserve  Board  made  pursuant  thereto,  it  shall  be  within 
the  power  of  the  board  after  hearing  to  require  such  bank 
to  surrender  its  stock  in  the  Federal  reserve  bank  and  to 
forfeit  all  rights  and  privileges  of  membership.  The 
Federal  Reserve  Board  may  restore  membership  upon 
due  proof  of  compliance  with  the  conditions  imposed  by 
this  section. 

Any  State  bank  or  trust  company  desiring  to  withdraw 
from  membership  in  a  Federal  reserve  bank  may  do  so, 
after  six  months'  written  notice  shall  hav«  been  filed  with 
the  Federal  Reserve  Board,  upon  the  surrender  and  can- 
cellation of  all  of  its  holdings  of  capital  stock  in  the  Fed- 
eral reserve  bank:  Provided,  however,  That  no  Federal 
reserve  bank  shall,  except  under  express  authority  of  the 
Federal  Reserve  Board,  cancel  within  the  same  calendar 
year  more  than  twenty-five  per  centum  of  its  capital 
stock  for  the  purpose  of  effecting  voluntary  withdrawals 
during  that  year.  All  such  applications  shall  be  dealt 
with  in  the  order  in  which  they  are  filed  with  the  board. 
8881°— 20 2 


18  THE   FEDERAL   RESERVE   ACT.  Sec.  9. 

Whenever  a  member  bank  shall  surrender  its  stock  hold- 
ings in  a  Federal  reserve  bank,  or  shall  be  ordered  to  do 
so  by  the  Federal  Reserve  Board,  under  authority  of  law, 
all  of  its  rights  and  privileges  as  a  member  bank  shall 
thereupon  cease  and  determine,  and  after  due  provision 
has  been  made  for  any  indebtedness  due  or  to  become  due 
to  the  Federal  reserve  bank  it  shall  be  entitled  to  a  refund 
of  its  cash  paid  subscription  with  interest  at  the  rate  of 
one-half  of  one  per  centum  per  month  from  date  of  last 
dividend,  if  earned,  the  amount  refunded  in  no  event  to 
exceed  the  book  value  of  the  stock  at  that  time,  and  shall 
likewise  be  entitled  to  repayment  of  deposits  and  of  any 
other  balance  due  from  the  Federal  reserve  bank. 

No  applying  bank  shall  be  admitted  to  membership  in 
a  Federal  reserve  bank  unless  it  possesses  a  paid-up,  unim- 
paired capital  sufficient  to  entitle  it  to  become  a  national 
banking  association  in  the  place  where  it  is  situated 
under  the  provisions  of  the  national-bank  act. 

Banks  becoming  members  of  the  Federal  Reserve  Sys- 
tem under  authority  of  this  section  shall  be  subject  to 
%  the  provisions  of  this  section  and  to  those  of  this  act 

which  relate  specifically  to  member  banks,  but  shall  not 
be  subject  to  examination  under  the  provisions  of  the 
first  two  paragraphs  of  section  fifty-two  hundred  and 
forty  of  the  Revised  Statutes  as  amended  by  section 
twenty-one  of  this  act.1  Subject  to  the  provisions  of  this 
act  and  to  the  regulations  of  the  board  made  pursuant 
thereto,  any  bank  becoming  a  member  of  the  Federal 
Reserve  System  shall  retain  its  full  charter  and  statutory 
rights  as  a  State  bank  or  trust  company,  and  may  con- 
tinue to  exercise  all  corporate  powers  granted  it  by  the 
State  in  which  it  was  created,  and  shall  be  entitled  to  all 
privileges  of  member  banks:  Provided,  however,  That  no 
Federal  reserve  bank  shall  be  permitted  to  discount  for 
any  State  bank  or  trust  company  notes,  drafts,  or  bills  of 
exchange  of  any  one  borrower  who  is  liable  for  borrowed 
money  to  such  State  bank  or  trust  company  in  an  amount 
greater  than  ten  per  centum  of  the  capital  and  surplus  of 
such  State  bank  or  trust  company,  but  the  discount  of 
bills  of  exchange  drawn  against  actually  existing  value 
and  the  discount  of  commercial  or  business  paper  actually 
owned  by  the  person  negotiating  the  same  shall  not  be 
considered  as  borrowed  money  within  the  meaning  of  this 

i  Amending  section  21  of  this  act. 


Sacs.  10,  11.  THE   FEDERAL   RESERVE   ACT.  19 

section.1  The  Federal  reserve  bank,  as  a  condition  of 
the  discount  of  notes,  drafts,  and  bills  of  exchange  for 
such  State  bank  or  trust  company,  shall  require  a  certifi- 
cate or  guaranty  to  the  effect  that  the  borrower  is  not 
liable  to  such  bank  in  excess  of  the  amount  provided  by 
this  section,  and  will  not  be  permitted  to  become  liable 
in  excess  of  this  amount  while  such  notes,  drafts,  or  bills 
of  exchange  are  under  discount  with  the  Federal  reserve 
bank. 

It  shall  be  unlawful  for  any  officer,  clerk,  or  agent  of 
any  bank  admitted  to  membership  under  authority  of 
this  section  to  certify  any  check  drawn  upon  such  bank 
unless  the  person  or  company  drawing  the  check  has  on 
deposit  therewith  at  the  time  such  check  is  certified  an 
amount  of  money  equal  to  the  amount  specified  in  such 
check.  Any  check  so  certified  by  duly  authorized  officers 
shall  be  a  good  and  valid  obligation  against  such  bank, 
but  the  act  of  any  such  officer,  clerk,  or  agent  in  violation 
of  this  section  may  subject  such  bank  to  a  forfeiture 
of  its  membership  in  the  Federal  Reserve  System  upon 
hearing  by  the  Federal  Reserve  Board.2 

FEDERAL  RESERVE  BOARD. 

Sec.  10.  A  Federal  Reserve  Board  is  hereby  created    Asamendedby 

J  act        approved 

which  shall  consist  of  seven  members,  including  the  Sec-  Mar-  3> 1919- 
retary  of  the  Treasury  and  the  Comptroller  of  the  Cur- 
rency, who  shall  be  members  ex  officio,  and  five  members 
appointed  by  the  President  of  the  United  States,  by  and 
with  the  advice  and  consent  of  the  Senate.  In  selecting 
the  five  appointive  members  of  the  Federal  Reserve 
Board,  not  more  than  one  of  whom  shall  be  selected  from 
any  one  Federal  reserve  district,  the  President  shall  have 
due  regard  to  a  fair  representation  of  the  different  com- 
mercial, industrial  and  geographical  divisions  of  the 
country.  The  five  members  of  the  Federal  Reserve 
Board  appointed  by  the  President  and  confirmed  as  afore- 
said shall  devote  their  entire  time  to  the  business  of  the 
Federal  Reserve  Board  and  shall  each  receive  an  annual 
salary  of  $12,000,  payable  monthly  together  with  actual 
necessary  traveling  expenses,  and  the  Comptroller  of  the 
Currency,  as  ex  officio  member  of  the  Federal  Reserve 
Board,  shall,  in  addition  to  the  salary  now  paid  him  as 

i  Amended  by  section  11  (m),  as  amended  March  3,  1919.     See  post.  p.  25. 

'  See  section  5208,  Revised  Statutes,  as  amended  by  act  of  Sept.  26,  1918  (appendix, 
p.  79),  for  penalty  for  false  certification  of  checks  by  officers  of  Federal  Reserve  Banks 
and  national  banks. 


20  THE  FEDERAL  RESERVE  ACT.  Sec.  10 

Comptroller  of  the  Currency,  receive  the  sum  of  $7,000 
annually  for  his  services  as  a  member  of  said  board. 

The  Secretary  of  the  Treasury  and  the  Comptroller  of 
the  Currency  shall  be  ineligible  during  the  time  they  are 
in  office  and  for  two  years  thereafter  to  hold  any  office, 
position,  or  employment  in  any  member  bank.  The 
appointive  members  of  the  Federal  Reserve  Board  shall 
be  ineligible  during  the  time  they  are  in  office  and  for 
two  years  thereafter  to  hold  any  office,  position,  or  em- 
ployment in  any  member  bank,  except  that  this  restric- 
tion shall  not  apply  to  a  member  who  has  served  the  full 
term  for  which  he  was  appointed.  Of  the  five  members 
thus  appointed  by  the  President  at  least  two  shall  be 
persons  experienced  in  banking  or  finance.  One  shall 
be  designated  by  the  President  to  serve  for  two,  one  for 
four,  one  for  six,  one  for  eight,  and  one  for  ten  years,  and 
thereafter  each  member  so  appointed  shall  serve  for  a 
term  of  ten  years  unless  sooner  removed  for  cause  by  the 
President.  Of  the  five  persons  thus  appointed,  one  shall 
be  designated  by  the  President  as  governor  and  one  as 
vice  governor  of  the  Federal  Reserve  Board.  The 
governor  of  the  Federal  Reserve  Board,  subject  to  its 
supervision,  shall  be  the  active  executive  officer.  The 
Secretary  of  the  Treasury  may  assign  offices  in  the 
Department  of  the  Treasury  for  the  use  of  the  Federal 
Reserve  Board.  Each  member  of  the  Federal  Reserve 
Board  shall  within  fifteen  days  after  notice  of  appoint- 
ment make  and  subscribe  to  the  oath  of  office. 

The  Federal  Reserve  Board  shall  have  power  to  levy 
semiannually  upon  the  Federal  reserve  banks,  in  propor- 
tion to  their  capital  stock  and  surplus,  an  assessment 
sufficient  to  pa}^  its  estimated  expenses  and  the  salaries  of 
its  members  and  employees  for  the  half  year  succeeding 
the  levying  of  such  assessment,  together  with  any  deficit 
carried  forward  from  the  preceding  half  year. 

The  first  meeting  of  the  Federal  Reserve  Board  shall 
bo  held  in  Washington,  District  of  Columbia,  as  soon  as 
may  be  after  tho  passage  of  this  Act,  at  a  date  to  bo  fixed 
by  tho  Reserve  Bank  Organization  Committee.  The 
Socretary  of  tho  Treasury  shall  be  ex  officio  chairman  of 
the  Federal  Reserve  Board.  No  member  of  the  Federal 
Reserve  Board  shall  bo  an  officer  or  director  of  any  bank, 
banking  institution,  trust  company,  or  Federal  reserve 
bank  nor  hold  stock  in  any  bank,  banking  institution,  or 
trust  company;  and  before  entering  upon  his  duties  as  a 


Secs.  10,  11.  THE   FEDERAL   RESERVE   ACT.  21 

member  of  tho  Fedoral  Reserve  Board  he  shall  certify 
under  oath  to  the  Secretary  of  the  Treasury  that  lie 
has  complied  with  this  requirement.  Whenovor  a 
vacancy  shall  occur,  other  than  by  expiration  of  term, 
among  the  five  members  of  the  Federal  Reserve  Board 
appointed  by  the  President,  as  above  provided,  a  successor 
shall  be  appointed  by  the  President,  with  the  advice  and 
consent  of  the  Senate,  to  fill  such  vacancy,  and  when 
appointed  he  shall  hold  office  for  the  unexpired  term  of 
the  member  whose  place  he  is  selected  to  fill. 

The  President  shall  have  power  to  fill  all  vacancies 
that  may  happen  on  tho  Federal  Reserve  Board  during 
the  recess  of  the  Senate,  by  granting  commissions  which 
shall  expire  thirty  days  after  the  next  session  of  the 
Senate  convenes. 

Nothing  in  this  Act  contained  shall  be  construed  as 
taking  away  any  powers  heretofore  vested  by  law  in  the 
Secretary  of  the  Treasury  which  relate  to  the  supervision, 
management,  and  control  of  the  Treasury  Department 
and  bureaus  under  such  department,  and  wherever  any 
power  vested  by  this  Act  in  the  Federal  Reserve  Board 
or  the  Federal  reserve  agent  appears  to  conflict  with  the 
powers  of  the  Secretary  of  the  Treasury,  such  powers 
shall  be  exercised  subject  to  the  supervision  and  control 
of  the  Secretary. 

The  Federal  Reserve  Board  shall  annually  make  a  full 
report  of  its  operations  to  the  Speaker  of  the  House  of 
Representatives,  who  shall  cause  the  same  to  be  printed 
for  the  information  of  the  Congress. 

Section  three  hundred  and  twenty-four  of  the  Revised 
Statutes  of  the  United  States  shall  bo  amended  so  as  to 
read  as  follows:  There  shall  be  in  the  Department  of  the 
Treasury  a  bureau  charged  with  the  execution  of  all  laws 
passed  by  Congress  relating  to  the  issue  and  regulation 
of  national  currency  secured  by  United  States  bonds  and, 
under  the  general  supervision  of  the  Federal  Reserve 
Board,  of  all  Federal  reserve  notes,  the  chief  officer  of 
which  bureau  shall  be  called  tho  Comptroller  of  the  Cur- 
rency and-  shall  perform  his  duties  under  the  general 
directions  of  the  Secretary  of  the  Treasury. 

Sec.  11.  The  Federal  Reserve  Board  shall  be  author-    As  amended  by 

act  approved 

ized  and  empowered:  iSt"  Vra8 

(a)  To  examine  at  its  discretion  the  accounts,  books  A" '  : 

Sept.  26,  r 

and  affairs  of  each  Federal  reserve  bank  and  of  each  &Pproved  Mar- 3> 
member  bank  and  to  require  such  statements  and  reports 


22  THE   FEDERAL   RESERVE   ACT.  Sec.  11. 

as  it  may  deem  necessary.  The  said  board  shall  publish 
once  each  week  a  statement  showing  the  condition  of 
each  Federal  reserve  bank  and  a  consolidated  statement 
for  all  Federal  reserve  banks.  Such  statements  shall 
show  in  detail  the  assets  and  liabilities  of  the  Federal 
reserve  banks,  single  and  combined,  and  shall  furnish 
full  information  regarding  the  character  of  the  money 
held  as  reserve  and  the  amount,  nature  and  maturities 
of  the  paper  and  other  investments  owned  or  held  by 
Federal  reserve  banks. 

(b)  To  permit,  or,  on  the  affirmative  vote  of  at  least 
five  members  of  the  Reserve  Board  to  require  Federal 
reserve  banks  to  rediscount  the  discounted  paper  of  other 
Federal  reserve  banks  at  rates  of  interest  to  be  fixed  by 
the  Federal  Reserve  Board. 

(c)  To  suspend  for  a  period  not  exceeding  thirty  days, 
and  from  time  to  time  to  renew  such  suspension  for  pe- 
riods not  exceeding  fifteen  days,  any  reserve  requirements 
specified  in  this  Act:  Provided,  That  it  shall  establish  a 
graduated  tax  upon  the  amounts  by  which  the  reserve 
requirements  of  this  Act  may  be  permitted  to  fall  below 
the  level  hereinafter  specified:  And  provided  further,  That 
when  the  gold  reserve  held  against  Federal  reserve  notes 
falls  below  forty  per  centum,  the  Federal  Reserve  Board 
shall  establish  a  graduated  tax  of  not  more  than  one  per 
centum  per  annum  upon  such  deficiency  until  the  reserves 
fall  to  thirty-two  and  one-half  per  centum,  and  when  said 
reserve  falls  below  thirty-two  and  one-half  per  centum, 
a  tax  at  the  rate  increasingly  of  not  less  than  one  and 
one-half  per  centum  per  annum  upon  each  two  and  one- 
half  per  centum  or  fraction  thereof  that  such  reserve  falls 
below  thirty-two  and  one-half  per  centum.  The  tax 
shall  be  paid  by  the  reserve  bank,  but  the  reserve  bank 
shall  add  an  amount  equal  to  said  tax  to  the  rates  of 
interest  and  discount  fixed  by  the  Federal  Reserve  Board. 

(d)  To  supervise  and  regulate  through  the  bureau 
under  the  charge  of  the  Comptroller  of  the  Currency  the 
issue  and  retirement  of  Federal  reserve  notes,  and  to 
prescribe  rules  and  regulations  under  which  such  notes 
may  bo  delivered  by  the  Comptroller  to  the  Federal 
reserve  agents  applying  therefor. 

(e)  To  add  to  the  number  of  cities  classified  as  reserve 
and  central  reserve  cities  under  existing  law  in  which 
national  banking  associations  are  subject  to  the  reserve 
requirements  set  forth  in  section  twenty  of  this  Act;  or 


Sec.  11.  THE   FEDERAL   RESERVE   ACT.  23 

to  reclassify  existing  reserve  and  centra]  reserve  eities  or 
to  terminate  their  designation  as  such. 

(f)  To  suspend  or  remove  any  officer  or  director  cf  any 
Federal  reserve  bank,  the  cause  of  such  removal  to  be 
forthwith  communicated  in  writing  by  the  Federal  Re- 
serve Board  to  the  removed  officer  or  director  and  to  Baid 
bank. 

(g)  To  require  the  writing  off  of  doubtful  or  worthless 
assets  upon  the  books  and  balance  sheets  of  Federal  re- 
serve banks. 

(h)  To  suspend,  for  the  violation  of  any  of  the  provi- 
sions of  this  Act,  the  operations  of  any  Federal  reserve 
bank,  to  take  possession  thereof,  administer  the  same  dur- 
ing the  period  of  suspension,  and,  when  deemed  advisable, 
to  liquidate  or  reorganize  such  bank. 

(i)  To  requiro  bonds  of  Federal  reserve  agents,  to  make 
regulations  for  the  safeguarding  of  all  collateral,  bonds, 
Federal  reserve  notes,  money  or  property  of  any  kind 
deposited  in  the  hands  of  such  agents,  and  said  board 
shall  perform  the  duties,  functions,  or  services  specified 
in  this  Act,  and  make  all  rides  and  regulations  nocessary 
to  enable  said  board  effectively  to  perform  the  same. 

(j)  To  exercise  general  supervision  over  said  Federal 
reserve  banks. 

(k)  To  grant  by  special  permit  to  national  banks 
applying  therefor,  when  not  in  contravention  of  State  or 
local  law,  the  right  to  act  as  trustee,  executor,  adminis- 
trator, registrar  of  stocks  and  bonds,  guardian  of  estates, 
assignee,  receiver,  committee  of  estates  of  lunatics,  or  in 
any  other  fiduciary  capacity  in  which  State  banks,  trust 
companies,  or  other  corporations  which  come  into  com- 
petition with  national  banks  are  permitted  to  act  under 
the  laws  of  the  State  in  which  the  national  bank  is  located. 

Whenever  the  laws  of  such  State  authorize  or  permit 
the  exercise  of  any  or  all  of  the  foregoing  powers  by  State 
banks,  trust  companies,  or  other  corporations  which 
compete  with  national  banks,  the  granting  to  and  the 
exercise  of  such  powers  by  national  banks  shall  not  be 
deemed  to  be  in  contravention  of  State  or  local  law 
within  the  meaning  of  tins  Act. 

National  banks  exercising  any  or  all  of  the  powers  enu- 
merated in  this  subsection  shall  segregate  all  assets  held 
in  any  fiduciary  capacity  from  the  general  assets  of  the 
bank  and  shall  keep  a  separate  set  of  books  and  records 
showing  in  proper  detail  all  transactions  engaged  in  under 


24  THE   FEDERAL   RESERVE   ACT.  Sec.  11. 

authority  of  this  subsection.  Such  books  and  records 
shall  be  open  to  inspection  by  the  State  authorities  to  the 
same  extent  as  the  books  and  records  of  corporations 
organized  under  State  law  which  exercise  fiduciary  pow- 
ers, but  nothing  in  this  Act  shall  be  construed  as  author- 
izing the  State  authorities  to  examine  the  books,  records, 
and  assets  of  the  national  bank  which  are  not  held  in 
trust  under  authority  of  this  subsection. 

No  national  bank  shall  receive  in  its  trust  department 
deposits  of  current  funds  subject  to  check  or  the  deposit 
of  checks,  drafts,  bills  of  exchange,  or  other  items  for  col- 
lection or  exchange  purposes.  Funds  deposited  or  held 
in  trust  by  the  bank  awaiting  investment  shall  be  carried 
in  a  separate  account  and  shall  not  be  used  by  the  bank 
in  the  conduct  of  its  business  unless  it  shall  first  set  aside 
in  the  trust  department  United  States  bonds  or  other 
securities  approved  by  the  Federal  Reserve  Board. 

In  the  event  of  the  failure  of  such  bank  the  owners  of 
the  funds  held  in  trust  for  investment  shall  have  a  hen 
on  the  bonds  or  other  securities  so  set  apart  in  addition  to 
their  claim  against  the  estate  of  the  bank. 

Whenever  the  laws  of  a  State  require  corporations  act- 
ing in  a  fiduciary  capacity,  to  deposit  securities  with  the 
State  authorities  for  the  protection  of  private  or  court 
trusts,  national  banks  so  acting  shall  be  required  to  make 
similar  deposits  and  securities  so  deposited  shall  be  held 
for  the  protection  of  private  or  court  trusts,  as  provided 
by  the  State  law. 

National  banks  in  such  cases  shall  not  be  required  to 
execute  the  bond  usually  required  of  individuals  if  State 
corporations  under  similar  circumstances  are  exempt  from 
this  requirement. 

National  banks  shall  have  power  to  execute  such  bond 
when  so  required  by  the  laws  of  the  State. 

In  any  case  in  which  the  laws  of  a  State  require  tliat  a 
corporation  acting  as  trustee,  executor,  administrator,  or 
in  any  capacity  specified  in  this  section,  shall  take  an 
oath  or  make  an  affidavit,  the  president,  vice  president, 
cashier,  or  trust  officer  of  such  national  bank  may  take 
the  necessary  oath  or  execute  the  necessary  affidavit. 

It  shall  be  unlawful  for  any  national  banking  associa- 
tion to  lend  any  officer,  director,  or  employee  any  funds 
held  in  trust  under  the  powers  conferred  by  this  section. 
Any  officer,  director,  or  employee  making  such  loan,  or  to 
whom  such  loan  is  made,  may  bo  fined  not  more  than 


Sec.  11.  THE   FEDERAL  RESERVE   ACT.  25 

$5,000,  or  imprisoned  not  more  than  live  years,  or  may 
be  both  fined  and  imprisoned,  in  the  discretion  of  the 
court. 

In  passing  upon  applications  for  permission  to  exercise 
the  powers  enumerated  in  this  subsection,  the  Federal 
Reserve  Board  may  take  into  consideration  the  amount 
of  capital  and  surplus  of  the  applying  bank,  whether  or 
not  such  capital  and  surplus  is  sufficient  under  the  cir- 
cumstances of  the  case,  the  needs  of  the  community  to  be 
served,  and  any  other  facts  and  circumstances  that  seem 
to  it  proper,  and  may  grant  or  refuse  the  application 
accordingly:  Provided,  That  no  permit  shall  be  issued  to 
any  national  banking  association  having  a  capital  and 
surplus  less  than  the  capital  and  surplus  required  by 
State  law  of  State  banks,  trust  companies,  and  corpora- 
tions exercising  such  powers. 

(1)  To  employ  such  attorneys,  experts,  assistants, 
clerks,  or  other  employees  as  may  be  deemed  necessary 
to  conduct  the  business  of  the  board.  All  salaries  and 
fees  shall  be  fixed  in  advance  by  said  board  and  shall  be 
paid  in  the  same  manner  as  the  salaries  of  the  members 
of  said  board.  All  such  attorneys,  experts,  assistants, 
clerks,  and  other  employees  shall  be  appointed  without 
regard  to  the  provisions  of  the  Act  of  January  sixteenth, 
eighteen  hundred  and  eighty-three  (volume  twenty-two, 
United  States  Statutes  at  Large,  page  four  hundred  and 
three),  and  amendments  thereto,  or  any  rule  or  regulation 
made  in  pursuance  thereof:  Provided,  That  nothing 
herein  shall  prevent  the  President  from  placing  said 
employees  in  the  classified  service. 

(m)  Upon  the  affirmative  vote  of  not  less  than  five  of 
its  members,  the  Federal  Reserve  Board  shall  have  power 
to  permit  Federal  reserve  banks  to  discount  for  any 
member  bank  notes,  drafts,  or  bills  of  exchange  bearing 
the  signature  or  endorsement  of  any  one  borrower  in 
excess  of  the  amount  permitted  by  section  nine  and 
section  thirteen  of  this  Act,  but  in  no  case  to  exceed 
twenty  per  centum  of  the  member  bank's  capital  and 
surplus:  Provided,  however,  That  all  such  notes,  drafts, 
or  bills  of  exchange  discounted  for  any  member  bank  in 
excess  of  the  amount  permitted  under  such  sections  shall 
be  secured  by  not  less  than  a  like  face  amount  of  bonds 
or  notes  of  the  United  States  issued  since  April  twenty- 
fourth,  nineteen  hundred  and  seventeen,  or  certificates 
of  indebtedness  of  the  United  States:  Provided  further, 


26  THE    FEDERAL   RESERVE    ACT.  Secs.  12,  13. 

That  the  provisions  of  this  subsection  (m)  shall  not  be 
operative  after  December  thirty-first,  nineteen  hundred 
and  twenty. 

FEDERAL    ADVISORY    COUNCIL. 

Sec.  12.  There  is  hereby  created  a  Federal  Advisory 
Council,  which  shall  consist  of  as  many  members  as  there 
are  Federal  reserve  districts.  Each  Federal  reserve  bank 
by  its  board  of  directors  shall  annually  select  from  its 
own  Federal  reserve  district  one  member  of  said  council, 
who  shall  receive  such  compensation  and  allowances  as 
may  be  fixed  by  his  board  of  directors  subject  to  the 
approval  of  the  Federal  Reserve  Board.  The  meetings 
of  said  advisory  council  shall  be  held  at  Washington, 
District  of  Columbia,  at  least  four  times  each  year,  and 
oftener  if  called  by  the  Federal  Reserve  Board.  The 
council  may  in  addition  to  the  meetings  above  provided 
for  hold  such  other  meetings  in  Washington,  District  of 
Columbia,  or  elsewhere,  as  it  may  deem  necessary,  may 
select  its  own  officers  and  adopt  its  own  methods  of  pro- 
cedure, and  a  majority  of  its  members  shall  constitute  a 
quorum  for  the  transaction  of  business.  Vacancies  in 
the  council  shall  be  filled  by  the  respective  reserve  banks, 
and  members  selected  to  fill  vacancies,  shall  serve  for  the 
unexpired  term. 

The  Federal  Advisory  Council  shall  have  power,  by 
itself  or  through  its  officers,  (1)  to  confer  directly  with  the 
Federal  Reserve  Board  on  general  business  conditions; 
(2)  to  make  oral  or  written  representations  concerning 
matters  within  the  jurisdiction  of  said  board;  (3)  to  call 
for  information  and  to  make  recommendations  in  regard 
to  discount  rates,  rediscount  business,  note  issues,  reserve 
conditions  in  the  various  districts,  the  purchase  and  sale 
of  gold  or  securities  by  reserve  banks,  open-market 
operations  by  said  banks,  and  the  general  affairs  of  the 
reserve  banking  system. 

POWERS  OF  FEDERAL  RESERVE  BANKS. 

Asamendedby       gee.  13.  Any  Federal  reserve  bank  may  receive  from 

acta p proved  _  J  J 

Mar.  3,  1915  (38  any  of  its  member  banks,  and  from  the  United  States,  * 

Stat.,  958,   chap.  J       _  ' 

Sew  a?$M"(39  deposits  °f  current  funds  in  lawful  money,  national -bank 
stat.,  752,  chap   notes,  Federal  reserve  notes,  or  checks,  and  drafts,  pay- 

4(>l);act  approved  '  '  '   I     J 

stat°  21232!ncha40  a^°  uPon  presentation,  and  also,  for  collection,  maturing 
32)-  notes  and  bills;  or,  solely  for  purposes  of  exchange  or  of 

1  Under  authority  of  War  Finance  Act,  approved  Apr.  5,  1918,  as  amended  by  act  of 
Mar.  3,  1919,  may  receive  deposits  from  War  Finance  Corporation.    See  appendix,  p.  71. 


Sec.  13.  THE   FEDERAL   RESERVE   ACT.  27 

collection,  may  receive  from  other  Federal  reserve  banks 
deposits  of  current  funds  in  lawful  money,  national-bank 
notes,  or  checks  upon  other  Federal  reserve  banks,  and 
checks  and  drafts,  payable  upon  presentation  within  its 
district,  and  maturing  notes  and  hills  payable  within  its 
district;  or,  solely  for  the  purposes  of  exchange  or  of 
collection,  may  receive  from  any  nonmembcr  bank  or  trust 
company  deposits  of  current  funds  in  lawful  money, 
national-bank  notes,  Federal  reserve  notes,  checks  and 
drafts  payable  upon  presentation,  or  maturing  notes  and 
bills:  Provided,  Such  nonmember  bank  or  trust  company 
maintains  with  the  Federal  reserve  bank  of  its  district  a 
balance  sufficient  to  offset  the  items  in  transit  held  for  its 
account  by  the  Federal  reserve  bank:  Provided,  further, 
That  nothing  in  this  or  any  other  section  of  this  act  shall 
be  construed  as  prohibiting  a  member  or  nonmember 
bank  from  making  reasonable  charges,  to  be  determined 
and  regulated  by  the  Federal  Reserve  Board,  but  in  no 
case  to  exceed  10  cents  per  $100  or  fraction  thereof,  based 
on  the  total  of  checks  and  drafts  presented  at  any  one 
time,  for  collection  or  payment  of  checks  and  drafts  and 
remission  therefor  by  exchange  or  otherwise ;  but  no  such 
charges  shall  be  made  against  the  Federal  reserve  banks. 
Upon  the  indorsement  of  any  of  its  member  banks, 
which  shall  be  deemed  a  waiver  of  demand,  notice  and 
protest  by  such  bank  as  to  its  own  indorsement  exclu- 
sively, any  Federal  reserve  bank  may  discount  notes, 
drafts,  and  bills  of  exchange  arising  out  of  actual  com- 
mercial transactions;  that  is,  notes,  drafts,  and  bills  of 
exchange  issued  or  drawn  for  agricultural,  industrial, 
or  commercial  purposes,  or  the  proceeds  of  which  have 
been  used,  or  are  to  be  used,  for  such  purposes,  the 
Federal  Reserve  Board  to  have  the  right  to  determine 
or  define  the  character  of  the  paper  thus  eligible  for 
discount,  within  the  meaning  of  this  Act.  Nothing  in 
this  Act  contained  shall  be  construed  to  prohibit  such 
notes,  drafts,  and  bills  of  exchange,  secured  by  staple 
agricultural  products,  or  other  goods,  wares,  or  merchan- 
dise from  being  eligible  for  such  discount;  but  such  defi- 
nition shall  not  include  notes,  drafts,  or  bills  covering 
merely  investments  or  issued  or  drawn  for  the  purpose 
of  carrying  or  trading  in  stocks,  bonds,  or  other  invest- 
ment securities,  except  bonds  and  notes  of  the  Govern- 
ment  of   the  United  States.1     Notes,    drafts,    and  bills 

l  Or  bonds  of  the  War  Finance  Corporation.    See  act  approved  Apr.  5, 1918,  Appendix, 
p.  70. 


28  THE   FEDERAL   RESERVE   ACT.  Sec.  13. 

admitted  to  discount  under  the  terms  of  this  paragraph 
must  hare  a  maturity  at  the  time  of  discount  of  not 
more  than  ninety  days,  exclusive  of  days  of  grace: 
Provided,  That  notes,  drafts,  and  bills  drawn  or  issued 
for  agricultural  purposes  or  based  on  live  stock  and  having 
a  maturity  not  exceeding  six  months,  exclusive  of  days 
of  grace,  may  be  discounted  in  an  amount  to  be  limited 
to  a  percentage  of  the  assets  of  the  Federal  reserve  bank, 
to  be  ascertained  and  fixed  by  the  Federal  Reserve 
Board. 

The  aggregate  of  such  notes,  drafts,  and  bills  bearing 
the  signature  or  indorsement  of  any  one  borrower, 
whether  a  person,  company,  firm,  or  corporation,  redis- 
counted  for  any  one  bank  shall  at  no  time  exceed  ten 
per  centum  of  the  unimpaired  capital  and  surplus  of 
said  bank;  but  this  restriction  shall  not  apply  to  the  dis- 
count of  bills  of  exchange  drawn  in  good  faith  against 
actually  existing  values.1 

Any  Federal  reserve  bank  may  discount  acceptances 
of  the  kinds  hereinafter  described,  which  have  a  maturity 
at  the  time  of  discount  of  not  more  than  three  months' 
sight,  exclusive  of  days  of  grace,  and  which  are  indorsed 
by  at  least  one  member  bank. 

Any  member  bank  may  accept  drafts  or  bills  of 
exchange  drawn  upon  it  having  not  more  than  six 
months'  sight  to  run,  exclusive  of  days  of  grace,  which 
grow  out  of  transactions  involving  the  importation  or 
exportation  of  goods;  or  which  grow  out  of  transactions 
involving  the  domestic  shipment  of  goods  provided 
shipping  documents  conveying  or  securing  title  are  at- 
tached at  the  time  of  acceptance;  or  which  are  secured 
at  the  time  of  acceptance  by  a  warehouse  receipt  or  other 
such  document  conveying  or  securing  title  covering 
readily  marketable  staples.  No  member  bank  shall 
accept,  whether  in  a  foreign  or  domestic  transaction,  for 
any  one  person,  company,  firm,  or  corporation  to  an 
amount  equal  at  any  time  in  the  aggregate  to  more  than 
ten  per  centum  of  its  paid-up  and  unimpaired  capital 
stock  and  surplus,  unless  the  bank  is  secured  either  by 
attached  documents  or  by  some  other  actual  security 
growing  out  of  the  same  transaction  as  the  acceptance; 
and  no  bank  shall  accept  such  bills  to  an  amount  equal 
at  any  time  in  the  aggregate  to  more  than  one-half  of 
its  paid-up  and  unimpaired  capital  stock  and  surplus: 
Provided,    however,    That    the    Federal    Reserve    Board, 

1  Amended  by  section  11  (m),  as  amended  March  3,  1919.    See  ante,  p.  25. 


Sec.  13.  •        THE   FEDERAL,  RESERVE   ACT.  29 

under  such  general  regulations  as  it  may  prescribe,  which 
shall  apply  to  all  banks  alike  regardless  of  the  amount 
of  capital  stock  and  surplus,  may  authorize  any  member 
bank  to  accept  such  bills  to  an  amount  not  exceeding 
at  any  time  in  the  aggregate  one  hundred  per  centum  of 
its  paid-up  and  unimpaired  capital  stock  and  surplus: 
Provided  further,  That  the  aggregate  of  acceptances 
growing  out  of  domestic  transactions  shall  in  no  event 
exceed  fifty  per  centum  of  such  capital  stock  and  surplus. 

Any  Federal  reserve  bank  may  make  advances  to  its 
member  banks  on  their  promissory  notes  for  a  period 
not  exceeding  fifteen  days  at  rates  to  be  established  by 
such  Federal  reserve  banks,  subject  to  the  review  and 
determination  of  the  Federal  Reserve  Board,  provided 
such  promissory  notes  are  secured  by  such  notes,  drafts, 
bills  of  exchange,  or  bankers'  acceptances  as  are  eligible 
for  rediscount  or  for  purchase  by  Federal  reserve  banks 
under  the  provisions  of  this  Act,  or  by  the  deposit  or 
pledge  of  bonds  or  notes  of  the  United  States.1 

Section  fifty-two  hundred  and  two  of  the  Revised  Stat- 
utes of  the  United  States  is  hereby  amended  so  as  to  read 
as  follows:  "  No  national  banking  association  shall  at  any 
time  be  indebted,  or  in  any  way  liable ,  to  an  amount  exceed- 
ing the  amount  of  its  capital  stock  at  such  time  actually 
paid  in  and  remaining  undiminished  by  losses  or  otherwise, 
except  on  account  of  demands  of  the  nature  following: 

First.  Notes  of  circulation. 

Second.  Moneys  deposited  with  or  collected  by  the 
association. 

Third.  Bills  of  exchange  or  drafts  drawn  against  money 
actually  on  deposit  to  the  credit  of  the  association,  or  due 
thereto. 

Fourth.  Liabilities  to  the  stockholders  of  the  associa- 
tion for  dividends  and  reserve  profits. 

Fifth.  Liabilities  incurred  under  the  provisions  of  the 
Federal  Reserve  Act. 

Sixth.  liabilities  incurred  under  the  provisions  of  the 
War  Finance  Corporation  Act.2 

Seventh.  Liabilities  created  by  the  indorsement  of  ac- 
cepted bills  of  exchange  payable  abroad  actually  owned 
by  the  indorsing  bank  and  discounted  at  home  or  abroad.2 

The  discount  and  rediscount  and  the  purchase  and  sale 
by  any  Federal  reserve  bank  of  any  bills  receivable  and 

1  Or  by  bonds  of  War  Finance  Corporation.  See  sec.  13,  War  Finance  Corporation 
Act,  approved  Apr.  5,  1918,  appendix,  p.  70. 

2  These  two  subparagraphs  were  added  to  section  5202,  Revised  Statutes,  by  the  War 
Finance  Corporation  Act,  approved  Apr.  5,  1918,  and  by  the  act  of  Oct.  22, 1919,  re- 
spectively.   See  appendix,  p.  78. 


30  THE    FEDERAL   RESERVE    ACT.        ■  Sec.  13. 

of  domestic  and  foreign  bills  of  exchange,  and  of  accept- 
ances authorized  by  this  Act,  shall  be  subject  to  such 
restrictions,  limitations,  and  regulations  as  may  be  im- 
posed by  the  Federal  Reserve  Board. 

That  in  addition  to  the  powers  now  vested  by  law  in 
national  banking  associations  organized  under  the  laws 
of  the  United  States  any  such  association  located  and 
doing  business  in  any  place  the  population  of  which  does 
not  exceed  five  thousand  inhabitants,  as  shown  by  the 
last  preceding  decennial  census,  may,  under  such  rules 
and  regulations  as  may  be  prescribed  by  the  Comptroller 
of  the  Currency,  act  as  the  agent  for  any  fire,  life,  or 
other  insurance  company  authorized  by  the  authorities 
of  the  State  in  which  said  bank  is  located  to  do  business 
in  said  State,  by  soliciting  and  selling  insurance  and  col- 
lecting premiums  on  policies  issued  by  such  company; 
and  may  receive  for  services  so  rendered  such  fees  or 
commissions  as  may  be  agreed  upon  between  the  said 
association  and  the  insurance  company  for  which  it  may 
act  as  agent;  and  may  also  act  as  the  broker  or  agent 
for  others  in  making  or  procuring  loans  on  real  estate 
located  within  one  hundred  miles  of  the  place  in  which 
said  bank  may  be  located,  receiving  for  such  services  a 
reasonable  fee  or  commission:  Provided,  however,  That 
no  such  bank  shall  in  any  case  guarantee  either  the  prin- 
cipal or  interest  of  any  such  loans  or  assume  or  guarantee 
the  payment  of  any  premium  on  insurance  policies  issued 
through  its  agency  by  its  principal:  And  provided  further, 
That  the  bank  shall  not  guarantee  the  truth  of  any  state- 
ment made  by  an  assured  in  filing  his  application  for 
insurance. 

Any  member  bank  may  accept  drafts  or  bills  of 
exchange  drawn  upon  it  having  not  more  than  three 
months'  sight  to  run,  exclusive  of  days  of  grace,  drawn 
under  regulations  to  be  prescribed  by  the  Federal  Reserve 
Board  by  banks  or  bankers  in  foreign  countries  or  depend- 
encies or  insular  possessions  of  the  United  States  for  the 
purpose  of  furnishing  dollar  exchange  as  required  by  the 
usages  of  trade  in  the  respective  countries,  dependencies, 
or  insular  possessions.  Such  drafts  or  bills  may  be 
acquired  by  Federal  reserve  banks  in  such  amounts  and 
subject  to  such  regulations,  restrictions,  and  limitations 
as  may  be  prescribed  by  the  Federal  Reserve  Board: 
Provided,  however,  That  no  member  bank  shall  accept 
such  drafts  or  bills  of  exchange  referred  to  this  paragraph 
for  any  one  bank  to  an  amount  exceeding  in  the  aggregate 
ten  per  centum  of  the  paid-up  and  unimpaired  capital 


Sacs.  13, 14.  THE   FEDERAL  RESERVE   ACT.  31 

and  surplus  of  the  accepting  bank  unless  the  draft  or  bill  of 
exchange  is  accompanied  by  documents  conveying  or  se- 
curing title  or  by  some  other  adequate  security:  Provided 
further,  That  no  member  bank  shall  accept  such  drafts  or 
bills  in  an  amount  exceeding  at  any  time  the  aggregate  of 
one-half  of  its  paid-up  and  unimpaired  capital  and  surplus. 

OPEN-MARKET    OPERATIONS. 

Sec.  14.  Any  Federal  reserve  bank  mav,  under  rules    As  amended  bv 

,    •  .  •   '  act         approved 

and    regulations    prescribed    by    the    Federal    Reserve  Sept.  7,1916(39 

°  -i        ti  •  i  Stat.,   752,  chap. 

Board,  purchase  and  sell  in  the  open  market,  at  home  or  «i);  act  approved 

.  i  •    t  »  t  l      •  ,  .  ,  June  21,   1917  (40 

abroad,   either  irom  or  to   domestic  or  foreign  banks,  stat.,  232,  chap. 
firms,  corporations,   or  individuals,  cable  transfers  and  Apr- 13, 1920. 
bankers'  acceptances  and  bills  of  exchange  of  the  kinds 
and  maturities  by  this  Act  made  eligible  for  rediscount, 
with  or  without  the  indorsement  of  a  member  bank. 
Even'  Federal  reserve  bank  shall  have  power: 

(a)  To  deal  in  gold  coin  and  bullion  at  home  or  abroad, 
to  make  loans  thereon,  exchange  Federal  reserve  notes  for 
gold,  gold  coin,  or  gold  certificates,  and  to  contract  for 
loans  of  gold  coin  or  bullion,  giving  therefor,  when 
necessary,  acceptable  security,  including  the  hypothe- 
cation of  United  States  bonds  or  other  securities  which 
Federal  reserve  banks  are  authorized  to  hold; 

(b)  To  buy  and  sell,  at  home  or  abroad,  bonds  and  notes 
of  the  United  States,  and  bills,  notes,  revenue  bonds,  and 
warrants  with  a  maturity  from  date  of  purchase  of  not 
exceeding  six  months,  issued  in  anticipation  of  the  collec- 
tion of  taxes  or  in  anticipation  of  the  receipt  of  assured 
revenues  by  any  State,  county,  district,  political  subdivi- 
sion, or  municipality  in  the  continental  United  States,  in- 
cluding irrigation,  drainage  and  reclamation  districts,  such 
purchases  to  be  made  in  accordance  with  rules  and  regula- 
tions prescribed  by  the  Federal  Reserve  Board; 

(c)  To  purchase  from  member  banks  and  to  sell,  with 
or  without  its  indorsement,  bills  of  exchange  arising  out 
of  commercial  transactions,  as  hereinbefore  defined; 

(d)  To  establish  from  time  to  time,  subject  to  review 
and  determination  of  the  Federal  Reserve  Board,  rates 
of  discount  to  be  charged  by  the  Federal  reserve  bank 
for  each  class  of  paper,  which  shall  be  fixed  with  a  view 
of  accommodating  commerce  and  business  and  which, 
subject  to  the  approval,  review,  and  determination  of 
the  Federal  Reserve  Board,  may  be  graduated  or  pro- 
gressed on  the  basis  of  the  amount  of  the  advances  and 
discount  accommodations  extended  by  the  Federal 
reserve  bank  to  the  borrowing  bank. 


32  THE   FEDERAL  RESERVE   ACT.  Secs.  14, 15. 

(e)  To  establish  accounts  with  other  Federal  reserve 
banks  for  exchange  purposes  and,  with  the  consent  or 
upon  the  order  and  direction  of  the  Federal  Reserve 
Board  and  under  regulations  to  be  prescribed  by  said 
board,  to  open  and  maintain  accounts  in  foreign  coun- 
tries, appoint  correspondents,  and  establish  agencies  in 
such  countries  wheresoever  it  may  be  deemed  best  for 
the  purpose  of  purchasing,  selling,  and  collecting  bills  of 
exchange,  and  to  buy  and  sell,  with  or  without  its  indorse- 
ment, through  such  correspondents  or  agencies,  bills  of 
exchange  (or  acceptances)  arising  out  of  actual  commer- 
cial transactions  which  have  not  more  than  ninety  days 
to  run,  exclusive  of  days  of  grace,  and  which  bear  the 
signature  of  two  or  more  responsible  parties,  and,  with 
the  consent  of  the  Federal  Reserve  Board,  to  open  and 
maintain  banking  accounts  for  such  foreign  correspond- 
ents or  agencies.  Whenever  any  such  account  has  been 
opened  or  agency  or  correspondent  has  been  appointed 
by  a  Federal  reserve  bank,  with  the  consent  of  or  under 
the  order  and  direction  of  the  Federal  Reserve  Board, 
any  other  Federal  reserve  bank  may,  with  the  consent 
and  approval  of  the  Federal  Reserve  Board,  be  permitted 
to  carry  on  or  conduct,  through  the  Federal  reserve 
bank  opening  such  account  or  appointing  such  agency 
or  correspondent,  any  transaction  authorized  by  this 
section  under  rules  and  regulations  to  be  prescribed  by 
the  board. 

GOVERNMENT    DEPOSITS. 

Sec.  15. x  The  moneys  held  in  the  general  fund  of  the 
Treasury,  except  the  five  per  centum  fund  for  the  re- 
demption of  outstanding  national-bank  notes  and  the 
funds  provided  in  this  Act  for  the  redemption  of  Federal 
reserve  notes  may,  upon  the  direction  of  the  Secretary 
of  the  Treasury,  be  deposited  in  Federal  reserve  banks, 
which  banks,  when  required  by  the  Secretary  of  the 
Treasury,  shall  act  as  fiscal  agents  of  the  United  States,3 
and  the  revenues  of  the  Government  or  any  part  thereof 
may  be  deposited  in  such  banks,  and  disbursements 
may  be  made  by  checks  drawn  against  such  deposits. 

No  public  funds  of  the  Philippine  Islands,  or  of  the 
postal  savings,  or  any  Government  funds,  shall  be  depos- 
ited  in   the  continental  United  States  in  any  bank  not 

i  This  section  in  effect  amended  by  Appropriation  Act  of  1920,  approved  May  29, 1920. 
Appendix,  p.  82. 

2  Under  War  Finance  Corporation  Act,  approved  Apr.  5,  1918,  as  amended  by  ah  of 
Mar.  3,  1919,  Federal  Reserve  Banks  may  also  act  as  fiscal  agents  of  the  War  Finance 
Corporation.    Sec  Appendix,  p.  71. 


1918. 


Sec.  16.  THE  -FEDERAL   RESERVE   ACT.  33 

belonging  to  the  system  established  by  this  Act:1  Pro- 
vided, however,  That  nothing  in  this  Act  shall  be  construed 
to  deny  the  right  of  the  Secretary  of  the  Treasury  to  use 
member  banks  as  depositories. 

NOTE    ISSUES. 

Sec.  16.  Federal  reserve  notes,  to  be  issued  at  the  dis-     As  amended  i>y 

'  act  apjirnvcd 

cretion  of  the  Federal  Reserve  Board  for  the  purpose  of  sept.  7  1916  (39 

l        L  Stat.,   752,  chap. 

making  advances  to  Federal  reserve  banks  through  the  fei);  act  approved 

°  to  Juno  21,   1917  (40 

Federal  reserve  agents  as  hereinafter  set  forth  and  for  no  stat.,  232,  chap. 

0  32) .    A  ct   ap- 

other  purpose,  are  hereby  authorized.  The  said  notes  FQr1°8ved  SeP*« 
shall  be  obligations  of  the  United  States  and  shall  be  re- 
ceivable by  all  national  and  member  banks  and  Federal 
reserve  banks  and  for  all  taxes,  customs,  and  other  public 
dues.  They  shall  be  redeemed  in  gold  on  demand  at  the 
Treasury  Department  of  the  United  States,  in  the  city  of 
Washington,  District  of  Columbia,  or  in  gold  or  lawful 
money  at  any  Federal  reserve  bank. 

Any  Federal  reserve  bank  may  make  application  to  the 
local  Federal  reserve  agent  for  such  amount  of  the  Federal 
reserve  notes  hereinbefore  provided  for  as  it  may  require. 
Such  application  shall  be  accompanied  with  a  tender  to 
the  local  Federal  reserve  agent  of  collateral  in  amount 
equal  to  the  sum  of  the  Federal  reserve  notes  thus  applied 
for  and  issued  pursuant  to  such  application.  The  col- 
lateral security  thus  offered  shall  be  notes,  drafts,  bills  of 
exchange,  or  acceptances  acquired  under  the  provisions 
of  section  thirteen  of  this  act,  or  bills  of  exchange  indorsed 
by  a  member  bank  of  any  Federal  reserve  district  and 
purchased  under  the  provisions  of  section  fourteen  of  this 
act,  or  bankers'  acceptances  purchased  under  the  pro- 
visions of  said  section  fourteen,  or  gold  or  gold  certifi- 
cates; but  in  no  event  shall  such  collateral  security, 
whether  gold,  gold  certificates,  or  eligible  paper,  be  less 
than  the  amount  of  Federal  reserve  notes  applied  for.2 
The  Federal  reserve  agent  shall  each  day  notify  the  Fed- 
eral Reserve  Board  of  all  issues  and  withdrawals  of  Fed- 

1  Under  section  7  of  the  act  approved  Apr.  24, 1917,  sections  of  the  act  approved 
Sept.  24,  1917,  and  section  8  of  the  act  approved  Apr.  4,  1918,  the  proceeds  of  sale  of 
Liberty  bonds  of  the  first,  second,  and  third  issues  may  be  deposited  in  nonmember 
banks.  See  appendix,  pp.  68,  69.  The  act  of  May  18, 1916,  amending  the  Postal  Sav- 
ings Act,  authorizes  the  deposit  of  postal  savings  funds  in  nonmember  banks.  See 
appendix,  p.  66. 

2  Under  section  13  of  War  Finance  Corporation  Act,  approved  Apr.  5,  1918,  notes 
secured  by  War  Finance  Corporation  bonds  may  be  used  to  the  same  extent,  as  col- 
lateral, as  notes  secured  by  United  States  bonds.    See  appendix,  p.  70. 

8881°— 20 3+4 


34  THE  fedckai.  i:i:seeve  ACT.  Sec.  16. 

eral  reserve  notes  to  and  by  the  Federal  reserve  bank  to 
which  he  is  accredited.  The  said  Federal  Reserve  Board 
may  at  any  time  call  upon  a  Federal  reserve  bank  for 
additional  security  to  protect  the  Federal  reserve  notes 
issued  to  it. 

Every  Federal  reserve,  bank  shall  maintain  reserves  in 
gold  or  lawful  money  of  not  less  than  thirty-five  per 
centum  against  its  deposits  and  reserves  in  gold  of  not 
less  than  forty  per  centum  against  its  Federal  reserve 
notes  in  actual  circulation:  Provided,  however,  That  when 
the  Federal  reserve  agent  holds  gold  or  gold  certificates  as 
collateral  for  Federal  reserve  notes  issued  to  the  bank 
such  gold  or  gold  certificates  shall  be  counted  as  part  of 
the  gold  reserve  which  such  bank  is  required  fee  maintain 
against  its  Federal  reserve  notes  in  actual  circulation. 
Notes  so  paid  out  shall  bear  upon  then  faces  a  distinctive 
letter  and  serial  number  which  shall  be  assigned  by  the 
Federal  Reserve  Board  to  each  Federal  reserve  bank. 
Whenever  Federal  reserve  notes  issued  through  one  Fed- 
eral reserve  bank  shall  be  received  by  another  Federal 
reserve  bank,  they  shall  be  promptly  returned  for  credit 
or  redemption  to  the  Federal  reserve  bank  through  which 
they  were  originally  issued  or,  upon  direction  of  such 
Federal  reserve  bank,  they  shall  be  forwarded  direct  to 
the  Treasurer  of  the  United  States  to  be  retired.  No 
Federal  reserve  bank  shall  pay  out  notes  issued  through 
another  under  penalty  of  a  tax  of  ten  per  centum  upon 
the  face  value  of  notes  so  paid  out.  Notes  presented  for 
redemption  at  the  Treasury  of  the  United  States  shall  be 
paid  out  of  the  redemption  fund  and  returned  to  the 
Federal  reserve  banks  through  which  they  were  originally 
issued,  and  thereupon  such  Federal  reserve  bank  shall, 
upon  demand  of  the  Secretary  of  the  Treasury,  reimburse 
such  redemption  fund  in  lawful  money  or,  if  such  Federal 
reserve  notes  have  been  redeemed  by  the  Treasurer  i:i 
gold  or  gold  certificates,  then  such  funds  shall  be  reim- 
bursed to  the  extent  deemed  necessary  by  the  Secretary 
of  the  Treasury  in  gold  or  gold  certificates,  and  such 
Federal  reserve  bank  shall,  so  long  as  any  of  its  Federal 
reserve  notes  remain  outstanding,  maintain  with  the 
Treasurer  in  gold  an  amount  sufficient  in  the  judgment 
of  the  Secretary  to  provide  for  all  redemptions  to  be  made 
by  the  Treasurer.  Federal  reserve  notes  received  by  the 
Treasurer  otherwise  than  for  redemption  may  be  ex- 
changed for  gold  out  of  the  redemption  fund  hereinafter 


Sec.  1G.  THE   FEDERAL  RESERVE   ACT.  35 

provided  and  returned  to  the  reserve  bank  through  which 
they  were  originally  issued,  or  they  may  be  returned  to 
such  bank  for  the  credit  of  the  United  States.  Federal 
reserve  notes  unfit  for  circulation  shall  be  returned  by 
the  Federal  reserve  agents  to  the  Comptroller  of  the 
Currency  for  cancellation  and  destruction. 

The  Federal  Reserve  Board  shall  require  each  Federal 
reserve  bank  to  maintain  on  deposit  in  the  Treasury  of 
the  United  States  a  sum  in  gold  sufficient  in  the  judgment 
of  the  Secretary  of  the  Treasury  for  the  redemption  of 
the  Federal  reserve  notes  issued  to  such  bank,  but  in 
no  event  less  than  five  per  centum  of  the  total  amount 
of  notos  issued  less  the  amount  of  gold  or  gold  certificates 
held  by  the  Federal  reserve  agent  as  collateral  security; 
but  such  deposit  of  gold  shall  be  counted  and  included 
as  part  of  the  forty  per  centum  reserve  hereinbefore 
required.  The  board  shall  have  the  right,  acting  through 
the  Federal  reserve  agent,  to  grant  in  whole  or  in  part, 
or  to  reject  entirely  the  application  of  any  Federal 
reserve  bank  for  Federal  reserve  notes;  but  to  the  extent 
that  such  application  may  be  granted  the  Federal 
Reserve  Board  shall,  through  its  local  Federal  reserve 
agent,  supply  Federal  reserve  notes  to  the  banks  so 
applying,  and  such  bank  shall  be  charged  with  the 
amount  of  notes  issued  to  it  and  shall  pay  such  rate  of 
interest  as  may  be  established  by  the  Federal  Reserve 
Board  on  only  that  amount  of  such  notes  which  equals 
the  total  amount  of  its  outstanding  Federal  reserve 
notes  less  the  amount  of  gold  or  gold  certificates  held 
b}^  the  Federal  reserve  agent  as  collateral  security. 
Federal  reserve  notes  issued  to  any  such  bank  shall, 
upon  delivery,  together  with  such  notes  of  such  Federal 
reserve  bank  as  may  be  issued  under  section  eighteen 
of  this  act  upon  security  of  United  States  two  per  centum 
Government  bonds,  become  a  first  and  paramount  lien 
on  all  the  assets  of  such  bank. 

Any  Federal  reserve  bank  may  at  any  time  reduce 
its  liability  for  outstanding  Federal  reserve  notes  by 
depositing  with  the  Federal  reserve  agent  its  Federal 
reserve  notes,  gold,  gold  certificates,  or  lawful  money 
of  the  United  States.  Federal  reserve  notes  so  deposited 
shall  not  be  reissued,  except  upon  compliance  with  the 
conditions  of  an  original  issue. 


36  THE   FEDERAL   RESERVE   ACT.  Sec.  16. 

The  Federal  reserve  agent  shall  hold  such  gold,  gold 
certificates,  or  lawful  money  available  exclusively  for 
exchange  for  the  outstanding  Federal  reserve  notes 
when  offered  by  the  reserve  bank  of  which  he  is  a  director. 
Upon  the  request  of  the  Secretary  of  the  Treasury  the 
-^  Federal  Reserve  Board  shall  require  the  Federal  reserve 

agent  to  transmit  to  the  Treasurer  of  the  United  States 
so  much  of  the  gold  held  by  him  as  collateral  security  for 
Federal  reserve  notes  as  may  be  required  for  the  exclusive 
purpose  of  the  redemption  of  such  Federal  reserve  notes, 
but  such  gold  when  deposited  with  the  Treasurer  shall 
be  counted  and  considered  as  if  collateral  security  on 
deposit  with  the  Federal  reserve  agent. 

Any  Federal  reserve  bank  may  at  its  discretion  with- 
draw collateral  deposited  with  the  local  Federal  reserve 
agent  for  the  protection  of  its  Federal  reserve  notes 
issued  to  it  and  shall  at  the  same  time  substitute  therefor 
other  collateral  of  equal  amount  with  the  approval  of 
the  Federal  reserve  agent  under  regulations  to  be  pre- 
scribed by  the  Federal  Reserve  Board.  Any  Federal 
reserve  bank  may  retire  any  of  its  Federal  reserve  notes 
by  depositing  them  with  the  Federal  reserve  agent  or 
with  the  Treasurer  of  the  United  States,  and  such  Federal 
reserve  bank  shall  thereupon  be  entitled  to  receive  back 
the  collateral  deposited  with  the  Federal  reserve  agent 
for  the  security  of  such  notes.  Federal  reserve  banks 
shall  not  be  required  to  maintain  the  reserve  or  the  re- 
demption fund  heretofore  provided  for  against  Federal 
reserve  notes  which  have  been  retired.  Federal  reserve 
notes  so  deposited  shall  not  be  reissued  except  upon 
compliance  with  the  conditions  of  an  original  issue. 

All  Federal  reserve  notes  and  all  gold,  gold  certificates, 
and  lawful  money  issued  to  or  deposited  with  any 
Federal  reserve  agent  under  the  provisions  of  the  Federal 
reserve  act  shall  hereafter  be  held  for  such  agent,  under 
such  rules  and  regulations  as  the  Federal  Reserve  Board 
may  prescribe,  in  the  joint  custody  of  himself  and  tho 
Federal  reserve  bank  to  which  he  is  accredited.  Such 
agent  and  such  Federal  reserve  bank  shall  be  jointly 
liable  for  the  safe-keeping  of  such  Federal  reserve  notes, 
gold,  gold  certificates,  and  lawful  money.  Nothing 
herein  contained,  however,  shall  be  construed  to  pro- 
hibit a  Federal  reserve  agent  from  depositing  gold  or 
gold  certificates  with  the  Federal  Reserve  Board,  to  be 
held  by  such  board  subject  to  his  order,  or  with  the 


Sec.  16.  THE   FEDERAL   RESERVE   ACT.  37 

Treasurer  of  the  United  States  for  the  purposes  author- 
ized by  law. 

In  order  to  furnish  suitable  notes  for  circulation  as 
Federal  reserve  notes,  the  Comptroller  of  the  Currency 
shall,  under  the  direction  of  the  Secretary  of  the  Treasury, 
cause  plates  and  dies  to  be  engraved  in  the  best  manner 
to  guard  against  counterfeits  and  fraudulent  alterations, 
and  shall  have  printed  therefrom  and  numbered  such 
quantities  of  such  notes  of  the  denominations  of  $5,  $10, 
$20,  S50,  $100,  $500,  $1000,  $5000,  $10,000  as  may  bo 
required  to  supply  the  Federal  reserve  banks.  Such 
notes  shall  be  in  form  and  tenor  as  directed  by  the 
Secretary  of  the  Treasury  under  the  provisions  of  this 
Act  and  shall  bear  the  distinctive  numbers  of  the  several 
Federal  reserve  banks  through  which  they  are  issued. 

When  such  notes  have  been  prepared,  they  shall  be 
deposited  in  the  Treasury,  or  in  the  sub  treasury  or  mint 
of  the  United  States  nearest  the  place  of  business  of  each 
Federal  reserve  bank  and  shall  be  held  for  the  use  of  such 
bank  subject  to  the  order  of  the  Comptroller  of  the  Cur- 
rency for  their  delivery,  as  provided  by  this  Act. 

The  plates  and  dies  to  be  procured  by  the  Comptroller 
of  the  Currency  for  the  printing  of  such  circulating  notes 
shall  remain  under  his  control  and  direction,  and  the 
expenses  necessarily  incurred  in  executing  the  laws 
relating  to  the  procuring  of  such  notes,  and  all  other  ex- 
penses incidental  to  their  issue  and  retirement,  shall  be 
paid  by  the  Federal  reserve  banks,  and  the  Federal 
Reserve  Board  shall  include  in  its  estimate  of  expenses 
levied  against  the  Federal  reserve  banks  a  sufficient 
amount  to  cover  the  expenses  herein  provided  for. 

The  examination  of  plates,  dies,  bed  pieces,  and  so 
forth,  and  regulations  relating  to  such  examination  of 
plates,  dies,  and  so  forth,  of  national-bank  notes  provided 
for  in  section  fifty-one  hundred  and  seventy-four  Revised 
Statutes,  is  hereby  extended  to  include  notes  herein 
provided  for. 

Any  appropriation  heretofore  made  out  of  the  general 
funds  of  the  Treasury  for  engraving  plates  and  dies,  the 
purchase  of  distinctive  paper,  or  to  cover  any  other  ex- 
pense in  connection  with  the  printing  of  national-bank 
notes  or  notes  provided  for  by  the  Act  of  May  thirtieth, 
nineteen  hundred  and  eight,  and  any  distinctive  paper 
that  may  be  on  hand  at  the  time  of  the  passage  of  this 
Act  may  be  used  in  the  discretion  of  the  Secretary  for  the 


38  THE    FEDERAL   RESERVE   ACT.  Sec.  16. 

purposes  of  this  Act,  and  should  the  appropriations  here- 
tofore made  be  insufficient  to  meet  the  requirements  of 
tli is  Act  in  addition  to  circulating  notes  provided  for  by 
existing  law.  the  Secretary  is  hereby  authorized  to  use 
so  much  of  any  funds  in  the  Treasury  not  otherwise  ap- 
propriated for  the  purpose  of  furnishing  the  notes  afore- 
said :  Provided,  however,  That  nothing  in  this  section  con- 
tained  shall  be  construed  as  exempting  national  banks 
or  Federal  reserve  banks  from  their  liability  to  reimburse 
the  United  States  for  any  expenses  incurred  in  printing 
and  issuing  circulating  notes. 

Every  Federal  reserve  bank  shall  receive  on  deposit  at 
par  from  member  banks  or  from  Federal  reserve  banks 
checks  and  drafts  drawn  upon  any  of  its  depositors,  and 
when  remitted  by  a  Federal  reserve  bank,  checks  and 
drafts  drawn  by  any  depositor  m  any  other  Federal 
reserve  bank  or  member  bank  upon  funds  to  the  credit 
of  said  depositor  in  said  reserve  bank  or  member  bank. 
Nothing  herein  contained  shall  be  construed  as  prohibiting 
a  member  bank  from  charging  its  actual  expense  incurred 
in  collecting  and  remitting  funds,  or  for  exchange  sold 
to  its  patrons.  The  Federal  Reserve  Board  shall,  by 
rule,  fix  the  charges  to  be  collected  by  the  member  banks 
from  its  patrons  whose  checks  are  cleared  through  the 
Federal  reserve  bank  and  the  charge  which  may  be  im- 
posed for  the  service  of  clearing  or  collection  rendered 
by  the  Federal  reserve  bank. 

The  Federal  Reserve  Board  shall  make  and  promulgate 
from  time  to  time  regulations  governing  the  transfer  of 
funds  and  charges  therefor  among  Federal  reserve  banks 
and  their  branches,  and  may  at  its  discretion  exercise 
the  functions  of  a  clearing  house  for  snch  Federal  reserve 
banks,  or  may  designate  a  Federal  reserve  bank  to 
exercise  such  functions,  and  may  also  require  each  such 
bank  to  exercise  the  functions  of  a  clearing  house  for  its 
member  banks. 

That  the  Secretary  of  the  Treasury  is  hereby  authorized 
and  directed  to  receive  deposits  of  gold  coin  or  of  gold 
certificates  with  the  Treasurer  or  any  assistant  treasurer 
of  the  United  States  when  tendered  by  any  Federal 
reserve  bank  or  Federal  reserve  agent  for  credit  to  its  or 
his  account  with  the  Federal  Reserve  Board.  Tho  Sec- 
retary shall  prescribe  by  regulation  the  form  of  receipt 
to  be  issued  by  the  Treasurer  or  Assistant  Treasurer  to 
the  Federal  reserve  bank  or  Federal  reserve  agent  making 


Secs.  16,  17.  THE   FEDERAL   RESERVE   ACT.  39 

the  deposit,  and  a  duplicate  of  such  receipt  shall  be 
delivered  to  the  Federal  Reserve  Board  by  the  Treasurer 
at  Washington  upon  proper  advices  from  any  assistant 
treasurer  that  such  deposit  has  been  made.  Deposits  so 
made  shall  be  held  subject  to  the  orders  of  the  Federal 
Reserve  Board  and  shall  be  payable  in  gold  coin  or  gold 
certificates  on  the  order  of  the  Federal  Reserve  Board  to 
any  Federal  reserve  bank  or  Federal  reserve  agent  at  the 
Treasury  or  at  the  Subtreasury  of  the  United  States 
nearest  the  place  of  business  of  such  Federal  reserve 
bank  or  such  Federal  reserve  agent:  Provided,  however, 
That  any  expense  incurred  in  shipping  gold  to  or  from 
the  Treasury  or  sub  treasuries  in  order  to  make  such 
payments,  or  as  a  result  of  making  such  payments,  shall 
be  paid  by  the  Federal  Reserve  Board  and  assessed  against 
the  Federal  reserve  banks.  The  order  used  by  the  Fed- 
eral Reserve  Board  in  making  such  payments  shall  be 
signed  by  the  governor  or  vice  governor,  or  such  other 
officers  or  members  as  the  board  may  by  regulation 
prescribe.  The  form  of  such  order  shall  be  approved  by 
the  Secretary  of  the  Treasury. 

The  expenses  necessarily  incurred  in  carrying  out 
these  provisions,  including  the  cost  of  the  certificates  or 
receipts  issued  for  deposits  received,  and  all  expenses 
incident  to  the  handling  of  such  deposits  shall  be  paid 
by  the  Federal  Reserve  Board  and  included  in  its  assess- 
ments against  the  several  Federal  reserve  banks. 

Gold  deposits  standing  to  the  credit  of  any  Federal 
reserve  bank  with  the  Federal  Reserve  Board  shall,  at 
the  option  of  said  bank,  be  counted  as  part  of  the  lawful 
reserve  which  it  is  required  to  maintain  against  out- 
standing Federal  reserve  notes,  or  as  a  part  of  the  reserve 
it  is  required  to  maintain  against  deposits. 

Nothing  in  this  section  shall  be  construed  as  amending 
section  six  of  the  act  of  March  fourteenth,  nineteen  hun- 
dred, as  amended  by  the  acts  of  March  fourth,  nineteen 
hundred  and  seven,  March  second,  nineteen  hundred  and 
eleven,  and  June  twelfth,  nineteen  hundred  and  sixteen, 
nor  shall  the  provisions  of  this  section  be  construed  to 
apply  to  the  deposits  made  or  to  the  receipts  or  certifi- 
cates issued  under  those  acts. 

Sec.  17.  So  much  of  the  provisions  of  section  fifty-one  ac^app^ed 
hundred  and  fifty-nine  of  the  Revised  Statutes  of  the  ffi^191^* 
United  States,  and  section  four  of  the  act  of  June  twen-32^ 
tieth,  eighteen  hundred   and  seventy-four,   and  section 


40  THE    FEDKKAJ.    IM:Si.  lt\'K    ACT.  17,1*. 

eight  of  the  act  of  -July  twelfth,  eighteen  hundred  and 
eighty-two,  and  of  any  other  provisions  of  existing  stat- 
utes as  i-crjuiro  that  before  any  national  banking  asso>- 
ciaiion  shall  ho  authorized  t<>  commence  banking  business 
it  shall  transfer  and  deliver  to  the.  Treasurer  .,!'  the 
United  States  a  stated  amount  of  United  States  registered 
bonds,  ;uh!  so  much  of  those,  provisions  or  of  any  other 
provisions  of  existing  statutes  as  require  any  national 
banking  association  now  or  hereafter  organized  to  main- 
tain a  minimum  deposit  of  sueh  bonds  with  the  Treasurer 
is  hereby  repealed. 

REFUNDING    BONDS. 

Sec.  18.  After  two  years  from  the  passage  of  this  Act, 
and  at  any  time  during  a  period  of  twenty  years  there- 
after, any  member  bank  desiring  to  retire  the  whole  or  any 
part  of  its  circulating  notes,  may  file  with  the  Treasurer 
of  the  United  States  an  application  to  sell  for  its  account, 
at  par  and  accrued  interest,  United  States  bonds  securing 
circulation  to  be  retired. 

The  Treasurer  shall,  at  the,  end  of  each  quarterly  period, 
furnish  the  Federal  Reserve  Board  with  a  list  of  such 
applications,  and  the  Federal  Reserve  Board  may,  in  its 
discretion,  require,  tin1  Federal  reserve  banks  to  purchase 
such  bonds  from  the  banks  whose  applications  have  been 
filed  with  the  Treasurer  at  least  ten  days  before  the  end 
of  any  quarterly  period  at  which  the  Federal  Reserve 
Board  may  direct  the  purchase  to  be  made:  Provided, 
That  Federal  reserve  banks  shall  not  be  permitted  to 
purchase  an  amount  to  exceed  Si!  5, 000, 000  of  such  bonds 
in  anv  one  year,  and  which  amount  shall  include,  bonds 
acquired  under  section  four  of  this  Act  by  the  Federal 
reserve  bank. 

Prorvii'I  furilr.  i\  That  the  Federal  Reserve  Roard  shall 
allot  to  each  Federal  reserve  bank  such  proportion  of 
such  bonds  as  the  capital  and  surplus  of  such  bank  shall 
bear  to  the  aggregate  capiial  and  surplus  of  all  the  Fed- 
eral reserve  banks. 

Upon  notice  from  t  he  Treasurer  of  the  amount  of  bonds 
so  sold  for  its  account,  each  member  bank  shall  duly 
assign  and  transfer,  in  writing,  such  bonds  to  Kite  Federal 
reserve  bank  nurchasHig  ihe  same,  and  such  Federal 
reserve  bank  shall,  thereupon,  deposit  lawful'  money  with 
the  Treasurer  of  the  United  States  for  the  purchase  price 
of  such  bonds,  and  the  Treasurer  shall  pay  to  the  mem- 


Sec.  18.  THE   FEDERAL   RESERVE   ACT.  41 

ber  bank  selling  such  bonds  any  balance  duo  after  deduct- 
ing a  sufficient  sum  to  redeem  its  outstanding  notes 
secured  by  such  bonds,  which  notes  shall  be  canceled  and 
permanently  retired  when  redeemed. 

The  Federal  reserve  banks  purchasing  such  bonds  shall 
be  permitted  to  take  out  an  amount  of  circulating  notes 
equal  to  the  par  value  of  such  bonds. 

Upon  the  deposit  with  the  Treasurer  of  the  United 
States  of  bonds  so  purchased,  or  any  bonds  with  the  cir- 
culating privilege  acquired  under  section  four  of  this  Act, 
any  Federal  reserve  bank  making  such  deposit  in  the 
manner  provided  by  existing  law,  shall  be  entitled  to 
receive  from  the  Comptroller  of  the  Currency  circulating 
notes  in  blank,  registered  and  countersigned  as  provided 
by  law,  equal  in  amount  to  the  par  value  of  the  bonds 
so  deposited.1  Such  notes  shall  be  the  obligations  of  the 
Federal  reserve  bank  procuring  the  same,  and  shall  be  in 
form  prescribed  by  the  Secretary  of  the  Treasury,  and 
to  the  same  tenor  and  effect  as  national-bank  notes  now 
provided  by  law.  They  shall  be  issued  and  redeemed 
under  the  same  terms  and  conditions  as  national-bank 
notes  except  that  they  shall  not  be  limited  to  the  amount 
of  the  capital  stock  of  the  Federal  reserve  bank  issuing 
them. 

Upon  application  of  any  Federal  reserve  bank,  ap- 
proved by  the  Federal  Reserve  Board,  the  Secretary  of  the 
Treasury  may  issue,  in  exchange  for  United  States  two 
per  centum  gold  bonds  bearing  the  circulation  privilege/ 
but  against  which  no  circulation  is  outstanding,  one- 
year  gold  notes  of  the  United  States  without  the  circula- 
tion privilege,  to  an  amount  not  to  exceed  one-half  of  the 
two  per  centum  bonds  so  tendered  for  exchange,  and 
thirty-year  three  per  centum  gold  bonds  without  the 
circulation  privilege  for  the  remainder  of  the  two  per 
centum  bonds  so  tendered :  Provided,  That  at  the  time  of 
such  exchange  the  Federal  reserve  bank  obtaining  such 
one-year  gold  notes  shall  enter  into  an  obligation  with 
the  Secretary  of  the  Treasury  binding  itself  to  purchase 
from  the  United  States  for  gold  at  the  maturity  of  such 
one-year  notes,  an  amount  equal  to  those  delivered  in  ex- 
change for  such  bonds,  if  so  requested  by  the  Secretary, 
and  at  each  maturity  of  one-year  notes  so  purchased  by 

1  Under  act  of  Apr.  23,  1918,  Federal  reserve  banks  may  issue  Federal  reserve  bank 
notes  in  any  denominations,  including  SI  and  S2,  against  the  security  of  United  States 
certificates  of  indebtedness  to  the  extent  permitted  by  that  act.  See  appendix,  pp.  73 
and  74,  sec.  5. 


I 

42  THE   FEDERAL   RESERVE   ACT.  Secs.  18, 19. 

such  Federal  reserve  bank,  to  purchase  from  the  United 
States  such  an  amount  of  one-year  notes  as  the  Secretary 
may  tender  to  such  bank,  not  to  exceed  the  amount  issued 
to  such  bank  in  the  firs-t  instance,  in  exchange  for  the  two 
per  centum  United  States  gold  bonds;  said  obligation  to 
purchase  at  maturity  such  notes  shall  continue  in  force 
for  a  period  not  to  exceed  thirty  years. 

For  the  purpose  of  making  the  exchange  herein  pro- 
vided for,  the  Secretary  of  the  Treasury  is  authorized  to 
issue  at  par-  Treasury  notes  in  coupon  or  registered  form 
as  he  may  prescribe  in  denominations  of  one  hundred 
dollars,  or  any  multiple  thereof,  bearing  interest  at  the 
rate  of  three  per  centum  per  annum,  payable  quarterly, 
such  Treasury  notes  to  be  payable  not  more  than  one 
year  from  the  date  of  their  issue  in  gold  coin  of  the  present 
standard  value,  and  to  be  exempt  as  to  principal  and 
interest  from  the  payment  of  all  taxes  and  duties  of  the 
United  States  except  as  provided  by  this  Act,  as  well  as 
from  taxes  in  any  form  by  or  under  State,  municipal,  or 
local  authorities.  And  for  the  same  purpose,  the  Secre- 
tary is  authorized  and  empowered  to  issue  United  States 
gold  bonds  at  par,  bearing  three  per  centum  interest 
payable  thirty  years  from  date  of  issue,  such  bonds  to  be 
of  the  same  general  tenor  and  effect  and  to  be  issued 
under  the  same  general  terms  and  conditions  as  the 
United  States  three  per  centum  bonds  without  the  circu- 
lation privdege  now  issued  and  outstanding. 

Upon  application  of  any  Federal  reserve  bank,  ap- 
proved by  the  Federal  Reserve  Board,  the  Secretary  may 
issue  at  par  such  three  per  centum  bonds  in  exchange  for 
the  one-year  gold  notes  herein  provided  for. 

BANK    RESERVES. 

act^aTi^ove?  Sec.  19.  Demand  deposits  within  the  meaning  of  this 
Stat /im!9 chip8  A-ct  shall  comprise  all  deposits  payable  within  thirty 
proved  aj°une  2T  days,  and  time  deposits  shall  comprise  all  deposits  paya- 
chip(.432)^ act  ap-  mo  after  thirty  days,  all  savings  accounts  and  certificates 
proved  sept.  26,  of  <ieposit  whicn  are  subject  to  not  less  than  thirty  days' 

notice  before  payment,  and  all  postal  savings  deposits.1 
Every  bank,   banking  association,  or  trust  company 

which   is   or  which   becomes   a  member  of  any  Federal 

»  Government  deposits  other  than  postal  savings  deposits  are  not  subject  to  reserve 
requirements.  See  section  7  of  First  Liberty  Bond  .Vet,  approved  Apr.  24,  1917,  ap- 
pendix, p.  68;  section 8  of  Second  Liberty  Bond  Act, approved  Sept.  24, 1917,  appendix, 
p.  09;  and  section  8  of  Third  Liberty  Bond  Act,  approved  Apr.  4, 1918,  appendix,  p.  69. 


Sec.  19.  THE   FEDERAL   RESERVE   ACT.  43 

reserve  bank  shall  establish  and  maintain  reserve  balances 
with  its  Federal  reserve  bank  as  follows: 

(a)  If  not  in  a  reserve  or  central  reserve  city,  as  now 
or  hereafter  defined,  it  shall  hold  and  maintain  with  tho 
Federal  reserve  bank  of  its  district  an  actual  net  balance, 
equal  to  not  less  than  seven  per  centum  of  tho  aggregate 
amount  of  its  demand  deposits  and  three  per  centum  of 
its  time  deposits. 

(6)  If  in  a  reserve  city,  as  now  or  hereafter  defined,  it 
shall  hold  and  maintain  with  the  Federal  reserve  bank  of 
its  district  an  actual  net  balance  equal  to  not  less  than  ten 
per  centum  of  the  aggregate  amount  of  its  demand 
deposits  and  three  per  centum  of  its  time  deposits:  Pro- 
vided, however,  That  if  located  in  the  outlying  districts  of 
a  reserve  city  or  in  territory  added  to  such  a  city  by  tho 
extension  of  its  corporate  charter,  it  may,  upon  the 
affirmative  vote  of  five  members  of  the  Federal  Reserve 
Board,  hold  and  maintain  the  reserve  balances  specified 
in  paragraph  (a)  hereof. 

(c)  If  in  a  central  reserve  city,  as  now  or  hereafter 
defined,  it  shall  hold  and  maintain  with  the  Federal 
reserve  bank  of  its  district  an  actual  net  balance  equal  to 
not  less  than  thirteen  per  centum  of  the  aggregate  amount 
of  its  demand  deposits  and  three  per  centum  of  its  time 
deposits:  Provided,  however,  That  if  located  in  the  out- 
lying districts  of  a  central  reserve  city  or  in  territory 
added  to  such  city  by  the  extension  of  its  corporate 
charter,  it  may,  upon  the  affirmative  vote  of  five  members 
of  the  Federal  Reserve  Board,  hold  and  maintain  the 
reserve  balances  specified  in  paragraphs  (a)  or  (6) 
thereof. 

No  member  bank  shall  keep  on  deposit  with  any  State 
bank  or  trust  company  which  is  not  a  member  bank  a 
sum  in  excess  of  ten  per  centum  of  its  own  paid-up  capi- 
tal and  surplus.  No  member  bank  shall  act  as  the  me- 
dium or  agent  of  a  nonmember  bank  in  applying  for 
or  receiving  discounts  from  a  Federal  reserve  bank  under 
the  provisions  of  this  Act,  except  by  permission  of  the 
Federal  Reserve  Board. 

The  required  balance  carried  by  a  member  bank  with 
a  Federal  reserve  bank  may,  under  the  regulations  and 
subject  to  such  penalties  as  may  be  prescribed  by  the 
Federal  Reserve  Board,  be  checked  against  and  with- 
drawn by  such  member  bank  for  the  purpose  of  meeting 
existing    liabilities:  Provided,    however,    That    no    bank 


44  THE   EEDEiiAL    RESEF.VK    ACT.  Skcs.  19^20,2*. 

shall  at  any  time,  make  new  loans  or  shall  pay  any  divi- 
dends unless  and  until  the  total  balance  required  by  law- 
is  fully  restored. 

In  estimating  the  balances  required  by  tliis  Act,  the 
net  difference  of  amounts  due  to  and  from  other  banks 
shall  be  taken  as  the  basis  for  ascertaining  the  deposits 
against  which  required  balances  with  Federal  reserve 
banks  shall  be  determined. 

National  banks,  or  banks  organized  under  local  laws, 
located  in  Alaska  or  in  a  dependency  or  insular  posses- 
sion  or  any  part  of  the  United  States  outside  the  conti- 
nental United  States  may  remain  nonmember  banks,  and 
shall  in  that  event  maintain  reserves  and  comply  with 
all  the  conditions  now  provided  by  law  regulating  th"in ; 
or  said  banks  may,  with  the  consent  of  the  Reserve 
Board,  become  member  banks  of  any  one  of  the  reserve 
districts,  and  shall  in  that  event  take  stock,  maintain 
reserves,  and  be  subject  to  all  the  other  provisions  of 
this  Act. 

Sec.  20.  So  much  of  sections  two  and  three  of  the  Act 
of  June  twentieth,  eighteen  hundred  and  seventy-four, 
entitled  "An  Act  fixing  the  amount  of  United  States 
notes,  providing  for  a  redistribution  of  the  national- 
bank  currency,  and  for  other  purposes,"  as  provides  that 
the  fund  deposited  by  any  national  banking  association 
with  the  Treasurer  of  the  United  States  for  the  redemp- 
tion of  its  notes  shall  be  counted  as  a  part  of  its  lawful 
reserve  as  provided  in  the  Act  aforesaid,  is  hereby 
repealed.  And  from  and  after  the  passage  of  this  Act 
such  fund  of  five  per  centum  shall  in  no  case  be  counted 
by  any  national  banking  association  as  a  part  of  its  law- 
ful reserve. 

15ANK    EXAMINATIONS. 

Sec.  21.  Section  fifty-two  hundred  and  forty,  United 
States  Revised  Statutes,  is  amended  to  read  as  follows: 

The  Comptroller  of  the  Currency,  with  the  approval 
of  the-  Secretary  of  the  Treasury,  sha'l  appoint  examin- 
ers who  shall  examine  every  tnemberlmnfe  '  a1  least  twice 
in  each  calendar  year  and  oftener  if  considered  necessary: 
Prov'nlcil,  "however,  That  the  Federal  Reserve  Board  may 
authorize  examination  by  the  State  authorities  to  be 
accepted  in  the  case  of  State  hanks  and  trust  companies 
and    may    at   any    time   direct    the   holding  of   a   special 

1  Except  banks  admit  ted  to  member  hip  in  the  system  under  authority  'if  section  9 
of  this  act.    See  section  9  of  this  act  as  amended  by  act  approved  Tone  21,  £917. 


Sec.  21.  THE   FEDERAL   RESERVE   ACT.  45 

examination  of  State  banks  or  trust  companies  that  are 
stockholders  in  any  Federal  reserve  bank.  The  exam- 
iner making  the  examination  of  any  national  bank,  or 
of  any  other  member  bank,  shall  have  power  to  make  a 
thorough  examination  of  all  the  affairs  of  the  bank,  and 
and  in  doing  so  he  shall  have  power  to  administer  oaths 
and  to  examine  any  of  the  officers  and  agents  thereof 
under  oath  and  shall  make  a  full  and  detailed  report  of 
the  condition  of  said  bank  to  the  Comptroller  of  the  Cur- 
rency. 

The  Federal  Reserve  Board,  upon  the  recommenda- 
tion of  the  Comptroller  of  the  Currency,  shall  fix  the 
salaries  of  all  bank  examiners  and  make  report  thereof 
to  Congress.  The  expense  of  the  examinations  herein 
provided  for  shall  be  assessed  by  the  Comptroller  of  the 
Currency  upon  the  banks  examined  in  proportion  to 
assets  or  resources  held  by  the  banks  upon  the  dates  of 
examination  of  the  various  banks. 

In  addition  to  the  examinations  made  and  conducted 
by  the  Comptroller  of  the  Currency,  every  Federal  re- 
serve bank  may,  with  the  approval  of  the  Federal  re- 
serve agent  or  the  Federal  Reserve  Board,  provide  for 
special  examination  of  member  banks  within  its  district. 
The  expense  of  such  examinations  shall  be  borne  by  the 
bank  examined.  Such  examinations  shall  be  so  conducted 
as  to  inform  the  Federal  reserve  bank  of  the  condition  of 
its  member  banks  and  of  the  lines  of  credit  which  are 
being  extended  by  them.  Every  Federal  reserve  bank 
shall  at  all  times  furnish  to  the  Federal  Reserve  Board 
such  information  as  may  be  demanded  concerning  the 
condition  of  any  member  bank  within  the  district  of  the 
said  Federal  reserve  bank. 

No  bank  shall  be  subject  to  any  visitatorial  powers 
other  than  such  as  are  authorized  by  law,  or  vested  in 
the  courts  of  justice  or  such  as  shall  be  or  shall  have  been 
exercised  or  directed  by  Congress,  or  by  either  House 
thereof  or  by  any  committee  of  Congress  or  of  either 
House  duly  authorized. 

The  Federal  Reserve  Board  shall,  at  least  once  each 
year,  order  an  examination  of  each  Federal  reserve 
bank,  and  upon  joint  application  of  ten  member  banks 
the  Federal  Reserve  Board  shall  order  a  special  exam- 
ination and  report  of  the  condition  of  any  Federal  re- 
serve bank. 


46  THE   FEDERAL    BESEBVE   ACT.  Sec.  22. 

art  "apjSiS      Sec-  22,    (a)   No  m(MlllH>r  bank  and  no  officer,  director, 

Stat!  223219cihap!  or  employee   thereof  shall   hereafter  make  any   loan  or 

p2rovedC^pt!2(t  Sraut  an.v  gratuity  to  an}'  bank  examiner.     Any  bank 

191S-  officer,    director,    or   employee    violating    this    provision 

shall  be  deemed  guilty  of  a  misdemeanor  and  shall  be 

imprisoned  not  exceeding  one  year  or  fined  not  more 

than  S3, 000.  or  both;  and  may  be  fined  a  further  sum 

equal  to  the  money  so  loaned  or  gratuity  given. 

Any  examiner  accepting  a  loan  or  gratuity  from  any 
bank  examined  by  him  or  from  an  officer,  director,  or 
employee  thereof  shall  be  deemed  guilty  of  a  misde- 
meanor and  shall  be  imprisoned  one  year  or  fined  not 
more  than  $5,000,  or  both,  and  may  be  fined  a  further 
sum  equal  to  the  money  so  loaned  or  gratuity  given,  and 
shall  forever  thereafter  be  disqualified  from  holding  office 
as  a  national  bank  examiner. 

(b)  No  national  bank  examiner  shall  perform  any 
other  service  for  compensation  while  holding  such  office 
for  any  bank  or  officer,  director,  or  employee  thereof. 

No  examiner,  public  or  private,  shall  disclose  the 
names  of  borrowers  or  the  collateral  for  loans  of  a  mem- 
ber bank  to  other  than  the  proper  officers  of  such  bank 
without  first  having  obtained  the  express  permission  in 
writing  from  the  Comptroller  of  the  Currency,  or  from 
the  board  of  directors  of  such  bank,  except  when  ordered 
to  do  so  by  a  court  of  competent  jurisdiction,  or  by 
direction  of  the  Congress  of  the  United  States,  or  of 
either  House  thereof,  or  any  committee  of  Congress,  or 
of  either  House  duly  authorized.  Any  bank  examiner 
violating  the  provisions  of  this  subsection  shall  be  im- 
prisoned not  more  than  one  year  or  fined  not  more  than 
$5,000,  or  both. 

(c)  Except  as  herein  provided,  any  officer,  director 
employee,  or  attorney  of  a  member  bank  who  stipulates 
for  or  receives  or  consents  or  agrees  to  receive  any  fee, 
commission,  gift,  or  thing  of  value  from  any  person,  firm, 
or  corporation,  for  procuring  or  endeavoring  to  procure 
for  such  person,  firm,  or  corporation,  or  for  any  other 
person,  firm,  or  corporation,  any  loan  from  or  the  pur- 
chase or  discount  of  any  paper,  note,  draft,  check,  or 
bill  of  exchange  by  such  member  bank  shall  be  deemed 
guilty  of  a  misdemeanor  and  shall  be  imprisoned  not 
more  than  one  year  or  fined  not  more  than  $5,000,  or 
both. 


Sec.  22.  THE   FEDERAL   RESERVE   ACT.  47 

(d)  Any  member  bank  may  contract  for,  or  purchase 
from,  any  of  its  directors  or  from  any  firm  of  which  any 
of  its  directors  is  a  member,  any  securities  or  other 
property,  when  (and  not  otherwise)  such  purchase  is 
made  in  the  regular  course  of  business  upon  terms 
not  less  favorable  to  the  bank  than  those  offered  to  others, 
or  when  such  purchase  is  authorized  by  a  majority  of  the 
board  of  directors  not  interested  in  the  sale  of  such 
securities  or  property,  such  authority  to  be  evidenced 
by  the  affirmative  vote  or  written  assent  of  such  directors: 
Provided,  however,  That  when  any  director,  or  firm  of 
which  any  director  is  a  member,  acting  for  or  on  behalf 
of  others,  sells  securities  or  other  property  to  a  member 
bank,  the  Federal  Reserve  Board  by  regulation  may, 
in  any  or  all  cases,  require  a  full  disclosure  to  be  made, 
on  forms  to  be  prescribed  by  it,  of  all  commissions  or 
other  considerations  received,  and  whenever  such  director 
or  firm,  acting  in  his  or  its  own  behalf,  sells  securities 
or  other  property  to  the  bank  the  Federal  Reserve  Board 
by  regulation,  may  require  a  full  disclosure  of  all  profit 
realized  from  such  sale. 

Any  member  bank  may  sell  securities  or  other  property 
to  any  of  its  directors,  or  to  a  firm  of  which  any  of  its 
directors  is  a  member,  in  the  regular  course  of  business 
on  terms  not  more  favorable  to  such  director  or  firm 
than  those  offered  to  others,  or  when  such  sale  is  author- 
ized by  a  majority  of  the  board  of  directors  of  a  member 
bank  to  be  evidenced  by  their  affirmative  vote  or  written 
assent:  Provided,  however,  That  nothing  in  this  sub- 
section contained  shall  be  construed  as  authorizing 
member  banks  to  purchase  or  sell  securities  or  other 
property  which  such  banks  are  not  otherwise  authorized 
by  law  to  purchase  or  sell. 

(e)  No  member  bank  shall  pay  to  any  director,  officer, 
attorney,  or  employee  a  greater  rate  of  interest  on  the 
deposits  of  such  director,  officer,  attorney,  or  employee 
than  that  paid  to  other  depositors  on  similar  deposits 
with  such  member  bank. 

(f )  If  the  directors  or  officers  of  any  member  bank  shall 
knowingly  violate  or  permit  any  of  the  agents,  officers, 
or  directors  of  any  member  bank  to  violate  any  of  the 
provisions  of  this  section  or  regulations  of  the  board 
made  under  authority  thereof,  every  director  and  officer 
participating  in  or  assenting  to  such  violation  shall  be 
held  liable  in  his  personal  and  individual  capacity  for  all 


48  XHE    FEDERAL   RESERVE   ACT.  Secs.  23, 24. 

damages  which  the  member  bank,  its  shareholders,  or 
any  other  persons  shall  have  sustained  in  consequence 
of  such  violation. 

Sec.  23.  The  stockholders  of  every  national  banking 
association  shall  be  held  individually  responsible  for  all 
contracts,  debts,  and  engagements  of  such  association, 
each  to  the  amount  of  his  stock  therein,  at  the  par  value 
thereof  in  addition  to  the  amount  invested  in  such  stock. 
The  stockholders  in  any  national  banking  association 
who  shall  have  transferred  their  shares  or  registered 
the  transfer  thereof  within  sixty  days  next  before  the 
date  of  the  failure  of  such  association  to  meet  its  obli- 
gations, or  with  knowledge  of  such  impending  failure, 
shall  be  liable  to  the  same  extent  as  if  they  had  made 
no  such  transfer,  to  the  extent  that  the  subsequent 
transferee  fails  to  meet  such  liability;  but  this  provision 
shall  not  be  construed  to  affect  in  any  way  any  recourse 
which  such  shareholders  might  otherwise  have  against 
those  in  whose  names  such  shares  are  registered  at  the 
time  of  such  failure. 

LOANS    ON    FARM    LANDS. 

acAtSapp"doevod  ^ec.  ^-  ^ny  national  banking  association  not  situ- 
itat  75291chat?  fc*6^  m  a  central  reserve  city  may  make  loans  secured 
^n.  by    improved    and    unencumbered    farm    land    situated 

within  its  Federal  reserve  district  or  within  a  radius  of 
one  hundred  .miles  of  the  place  in  which  such  bank  is 
located,  irrespective  of  district  lines,  and  may  also  make 
loans  secured  by  improved  and  unencumbered  real  es- 
tate located  within  one  hundred  miles  of  the  place  in 
which  such  bank  is  located,  irrespective  of  district  lines; 
but  no  loan  made  upon  the  security  of  such  farm  land 
shall  be  made  for  a  longer  time  than  five  years,  and  no 
loan  made  upon  the  security  of  such  real  estate  as  dis- 
tinguished from  farm  land  shall  be  made  For  a  longer 
time  than  one  year  nor  shall  the  amount  of  any  such 
loan,  whether  upon  such  farm  land  or  upon  such  real 
estate,  exceed  fifty  per  centum  of  the  actual  value  of 
the  property  offered  as  security.  Any  such  bank  may 
make  such  loans,  whether  secured  by  such  farm  land  or 
such  real  estate,  in  an  aggregate  sum  equal  to  twenty- 
five  per  centum  of  its  capital  and  surplus  or  to  one-third 
of  its  time  deposits  and  such  banks  may  continue  here- 
after as  heretofore  to  receive  time  deposits  and  to  pay 
interest  on  the  same. 


SE(    25.  THE   FEDEKAL   RESERVE   ACT.  49 

The  Federal  Reserve  Board  shall  have  power  from 
time  to  time  to  add  to  the  list  of  cities  in  which  national 
hanks  shall  not  he  permitted  to  make  loans  secured  upon 
real  estate  in  the  manner  described  in  this  section. 

FOREIGN    BRANCHES. 

Sec.  25.  Any  national  banking  association  possessing    As  amended  by 
a  capital  and  surplus  of  $1,000,000  or  more  may  file  appli-  Sept.  ?,  i»i 
cation  with  the  Federal  Reserve  Board  for  permission  to  *5i);'actapprov©a 
exercise,  upon  such  conditions  and  under  such  regulations 
as  may  be  prescribed  by  the  said  board,  either  or  both  of 
the  following  powers: 

First.  To  establish  branches  in  foreign  countries  or 
dependencies  or  insular  possessions  of  the  United  States 
for  the  futherance  of  the  foreign  commerce  of  the  United 
States,  and  to  act  if  required  to  do  so  as  fiscal  agents  of 
the  United  States. 

Second.  To  invest  an  amount  not  exceeding  in  the 
aggregate  ten  per  centum  of  its  paid-in  capital  stock  and 
surplus  in  the  stock  of  one  or  more  banks  or  corporations 
chartered  or  incorporated  under  the  laws  of  the  United 
States  or  of  any  State  thereof,  and  principally  engaged  in 
international  or  foreign  banking,  or  banking  in  a  depend- 
ency or  insular  possession  of  the  United  States  either 
directly  or  through  the  agency,  ownership,  or  control  of 
local  institutions  in  foreign  countries,  or  in  such  depend- 
encies or  insular  possessions. 

Until  January  1,  1921,  any  national  banking  associa- 
tion, without  regard  to  the  amount  of  its  capital  and  sur- 
plus, may  file  application  with  the  Federal  Reserve 
Board  for  permission,  upon  such  conditions  and  under 
such  regulations  as  may  be  prescribed  by  said  board,  to 
invest  an  amount  not  exceeding  in  the  aggregate  5  per 
centum  of  its  paid-in  capital  and  surplus  in  the  stock  of 
one  or  more  corporations  chartered  or  incorporated  under 
the  laws  of  the  United  States  or  of  any  State  thereof  and, 
regardless  of  its  location,  principally  engaged  in  such 
phases  of  international  or  foreign  financial  operations  as 
may  be  necessary  to  facilitate  the  export  of  goods,  wares, 
or  merchandise  from  the  United  States  or  any  of  its 
dependencies  or  insular  possessions  to  any  foreign  coun- 
try: Provided,  however,  That  in  no  event  shall  the  total 
investments  authorized  by  this  section  by  any  one 
national  bank  exceed  10  per  centum  of  its  capital  and 
surplus. 

8881°— 20— 4 


50  THE   FEDERAL  RESERVE   ACT.  Sec.  25. 

Such  application  shall  specify  the  name  and  capital  of 
the  banking  association  filing  it,  the  powers  applied  for, 
and  the  place  or  places  where  the  banking  or  financial 
operations  proposed  are  to  be  carried  on.  The  Federal 
Reserve  Board  shall  have  power  to  approve  or  to  reject 
such  application  in  whole  or  in  part  if  for  any  reason  the 
granting  of  such  application  is  deemed  inexpedient,  and 
shall  also  have  power  from  time  to  time  to  increase  or 
decrease  the  number  of  places  where  such  banking  opera- 
tions may  be  carried  on. 

Every  national  banking  association  operating  foreign 
branches  shall  be  required  to  furnish  information  con- 
cerning the  condition  of  such  branches  to  the  Comptroller 
of  the  Currency  upon  demand,  and  every  member  bank 
investing  in  the  capital  stock  of  banks  or  corporations 
described  above  shall  be  required  to  furnish  information 
concerning  the  condition  of  such  banks  or  corporations 
to  the  Federal  Reserve  Board  upon  demand,  and  the 
Federal  Reserve  Board  may  order  special  examinations 
of  the  said  branches,  banks,  or  corporations  at  such  time 
or  times  as  it  may  deem  best. 

Before  any  national  bank  shall  be  permitted  to  purchase 
stock  in  any  such  corporation  the  said  corporation  shall 
enter  into  an  agreement  or  undertaking  with  the  Federal 
Reserve  Board  to  restrict  its  operations  or  conduct  its 
business  in  such  manner  or  under  such  limitations  and  re- 
strictions as  the  said  board  may  prescribe  for  the  place 
or  places  wherein  such  business  is  to  be  conducted.  If  at 
any  time  the  Federal  Reserve  Board  shall  ascertain  that 
the  regulations  prescribed  by  it  are  not  being  complied 
with,  said  board  is  hereby  authorized  and  empowered  to 
institute  an  investigation  of  the  matter  and  to  send  for 
persons  and  papers,  subpoena  witnesses,  and  administer 
oaths  in  order  to  satisfy  itself  as  to  the  actual  nature  of 
the  transactions  referred  to.  Should  such  investigation 
result  in  establishing  the  failure  of  the  corporation  in 
question,  or  of  the  national  bank  or  banks  which  may  be 
stockholders  therein,  to  comply  with  the  regulations  laid 
down  by  the  said  Federal  Reserve  Board,  such  national 
banks  may  be  required  to  dispose  of  stock  holdings  in  the 
said  corporation  upon  reasonable  notice. 

Every  such  national  banking  association  shall  conduct 
the  accounts  of  each  foreign  branch  independently  of  the 
accounts  of  other  foreign  branches  established  by  it  and 
of  its  home  office,  and  shall  at  the  end  of  each  fiscal  period 


Sbc--"'  the  federal  reserve  act.  51 

transfer  to  its  genera]  Ledger  the  profit  or  Loss  accrued  at 
each  branch  as  a  separate  item. 

Any  director  or  other  officer,  agent,  or  employee  of  any 

member  bank  may,  with  the  approval  of  the  Federal  Un- 
serve Board,  be  a  director  or  other  officer,  agent,  or  em- 
ployee of  any  such  bank  or  corporation  above  men- 
tioned in  the  capita]  stock  of  which  such  member  bank 
shall  have  invested  as  hereinbefore  provided,  without 
being  subject  to  the  provisions  of  section  eight  of  the 
Act  approved  October  fifteenth,  nineteen  hundred  and 
fourteen,  entitled  "An  Act  to  supplement  existing  Jaws 
against  unlawful  restraints  and  monopolies,  and  for  other 
purposes."  1 

BANKING      CORPORATIONS     AUTHORIZED     TO     DO     FOREIGN 
BANKING     BUSINESS. 

Sec.    25    (a).  Corporations    to    be    organized    for    the    Added  by  Act 

.       L    .  &  Of  Dec.  24,  1919. 

purpose  of  engagmg  m  international  or  foreign  banking 
or  other  international  or  foreign  financial  operations,  or 
in  banking  or  other  financial  operations  in  a  dependency 
or  insular  possession  of  the  United  States,  either  directly 
or  through  the  agency,  ownership,  or  control  of  local  in- 
stitutions in  foreign  countries,  or  in  such  dependencies 
or  insular  possessions  as  provided  by  this  section,  and  to 
act  when  required  by  the  Secretary  of  the  Treasury  as 
fiscal  agents  of  the  United  States  may  be  formed  by  any 
number  of  natural  persons,  not  less  in  any  case  than  five. 

Such  persons  shall  enter  into  articles  of  association 
which  shall  specify  in  general  terms  the  objects  for  which 
the  association  is  formed  and  may  contain  any  other  pro- 
visions not  inconsistent  with  law  which  the  association 
may  see  fit  to  adopt  for  the  regulation  of  its  business  and 
the  conduct  of  its  affairs. 

Such  articles  of  association  shall  be  signed  by  all  of 
the  persons  intending  to  participate  in  the  organization 
of  the  corporation  and,  thereafter,  shall  be  forwarded  to 
the  Federal  Reserve  Board  and  shall  be  filed  and  pre- 
served in  its  office.  The  persons  signing  the  said  articles 
of  association  shall  under  their  hands,  make  an  organ- 
ization certificate  which  shall  specifically  state: 

First.  The  name  assumed  by  such  corporation,  which 
shall  be  subject  to  the  approval  of  the  Federal  Reserve 
Board. 

1  Tiie  Clayton  Act.    For  text  see  appendix,  p-  64. 


52  THE   FEDERAL  RESERVE   ACT.  Sec.  25a. 

Second.  The  place  or  places  where  its  operations  are 
to  be  carried  on. 

Third.  The  place  in  the  United  States  where  its  home 
office  is  to  be  located. 

Fourth.  The  amount  of  its  capital  stock  and  the  num- 
ber of  shares  into  which  the  same  shall  be  divided. 

Fifth.  The  names  and  places  of  business  or  residence 
of  the  persons  executing  the  certificate  and  the  number 
of  shares  to  which  each  has  subscribed. 

Sixth.  The  fact  that  the  certificate  is  made  to  enable 
the  persons  subscribing  the  same,  and  all  other  persons, 
firms,  companies,  and  corporations,  who  or  which  may 
thereafter  subscribe  to  or  purchase  shares  of  the  capital 
stock  of  such  corporation,  to  avail  themselves  of  the  ad- 
vantages of  this  section. 

The  persons  signing  the  organization  certificate  shall 
duly  acknowledge  the  execution  thereof  before  a  judge 
of  some  court  of  record  or  notary  public,  who  shall  cer- 
tify thereto  under  the  seal  of  such  court  or  notary,  and 
thereafter  the  certificate  shall  be  forwarded  to  the  Federal 
Reserve  Board  to  be  filed  and  preserved  in  its  office. 
Upon  duly  making  and  filing  articles  of  association  and 
an  organization  certificate,  and  after  the  Federal  Reserve 
Board  has  approved  the  same  and  issued  a  permit  to 
begin  business,  the  association  shall  become  and  be  a 
body  corporate,  and  as  such  and  in  the  name  designated 
therein  shall  have  power  to  adopt  and  use  a  corporate 
seal,  which  may  be  changed  at  the  pleasure  of  its  board  of 
directors ;  to  have  succession  for  a  period  of  twenty  years 
unless  sooner  dissolved  by  the  act  of  the  shareholders 
owning  two-thirds  of  the  stock  or  by  an  Act  of  Congress 
or  unless  its  franchises  become  forfeited  by  some  violation 
of  law;  to  make  contracts;  to  sue  and  be  sued,  complain, 
and  defend  in  any  court  of  law  or  equity;  to  elect  or 
appoint  directors,  all  of  whom  shall  be  citizens  of  the 
United  States;  and,  by  its  board  of  directors,  to  appoint 
such  officers  and  employees  as  may  be  deemed  proper, 
define  their  authority  and  duties,  require  bonds  of  them, 
and  fix  the  penalty  thereof,  dismiss  such  officers  or  em- 
ployees, or  any  thereof,  at  pleasure  and  appoint  others 
to  fill  their  places;  to  prescribe,  by  its  board  of  directors, 
by-laws  not  inconsistent  with  law  or  with  the  regulations 
of  the  Federal  Reserve  Board  regulating  the  manner  in 
which  its  stock  shall  be  transferred,  its  directors  elected 


Sec.25*u  THE   FEDERAL   EESEEVE   ACT.  53 

or  appointed,  its  officers  and  employees  appointed,  its 
property  transferred,  and  the  privileges  granted  to  it 
by  law  exercised  and  enjoyed. 

Each,  corporal  ion  so  organized  shall  have  power,  under 
such  rules  and  regulations  as  the  Federal  Reserve  Board 
may  prescribe: 

(a)  To  purchase,  sell,  discount,  and  negotiate,  with  or 
without  its  indorsement  or  guaranty,  notes,  drafts,, 
checks,  bills  of  exchange,  acceptances,  including  bankers' 
acceptances,  cable  transfers,  and  other  evidences  of 
indebtedness;  to  purchase  and  sell,  with  or  without  its 
indorsement  or  guaranty,  securities,  including  the 
obligations  of  the  United  States  or  oi  any  State  thereof 
but  not  including  shares  of  stock  in  any  corporation 
except  as  herein  provided ;  to  accept  bills  or  drafts  drawn 
upon  it  subject  to  such  limitations  and  restrictions  as 
the  Federal  Reserve  Board  may  impose;  to  issue  letters 
of  credit;  to  purchase  and  sell  coin,  bullion,  and  exchange ; 
to  borrow  and  to  lend  money;  to  issue  debentures,  bonds, 
and  promissory  notes  under  such  general  conditions  as 
to  security  and  such  limitations  as  the  Federal  Reserve 
Board  may  prescribe,  but  in  no  event  having  liabdities 
outstanding  thereon  at  any  one  time  exceeding  ten  times 
its  capital  stock  and  surplus;  to  receive  deposits  outside- 
of  the  United  States  and  to  receive  only  such  deposits 
within  the  United  States  as  may  be  incidental  to  or  for 
the  purpose  of  carrying  out  transactions  in  foreign  coun- 
tries or  dependencies  or  insular  possessions  of  the  United 
States;  and  generally  to  exercise  such  powers  as  are  inci- 
dental to  the  powers  conferred  by  this  Act  or  as  may  be 
usual,  in  the  determination  of  the  Federal  Reserve  Board, 
in  connection  with  the  transaction  of  the  business  of 
banking  or  other  financial  operations  in  the  countries, 
colonies,  dependencies,  or  possessions  in  which  it  shall 
transact  business  and  not  inconsistent  with  the  powers 
specifically  granted  herein.  Nothing  contained  in  this 
section  shall  be  construed  to  prohibit  the  Federal  Reserve 
Board,  under  its  power  to  prescribe  rules  and  regulations, 
from  limiting  the  aggregate  amount  of  liabilities  of  any 
or  all  (dasses  incurred  by  the  corporation  and  <>i:< standing 
at  any  one  time.  Whenever  a  corporation  organized 
under  this  section  receives  deposits  in  the  Tinted  States 
authorized  by  this  section  it  shall  carry  reserves  in  sueh 
amounts  as  the  Federal  Reserve  Board  may  prescribe, 
but  in  no  event  less  than  10  per  centum  of  its  deposits. 


54  THE   FEDERAL  RESERVE   ACT.  Sec.  25a. 

(b)  To  establish  and  maintain  for  the  transaction  of 
its  business  branches  or  agencies  in  foreign  countries, 
their  dependencies  or  colonies,  and  in  the  dependencies 
or  insular  possessions  of  the  United  States,  at  such 
places  as  may  be  approved  by  the  Federal  Reserve 
Board  and  under  such  rules  and  regulations  as  it  may 
prescribe,  including  countries  or  dependencies  not 
specified  in  the  original  organization  certificate. 

(c)  With  the  consent  of  the  Federal  Reserve  Board  to 
purchase  and  hold  stock  or  other  certificates  of  owner- 
ship in  any  other  corporation  organized  under  the  pro- 
visions of  this  section,  or  under  the  laws  of  any  foreign 
country  or  a  colony  or  dependency  thereof,  or  under 
the  laws  of  any  State,  dependency,  or  insular  possession 
of  the  United  States  but  not  engaged  in  the  general 
business  of  buying  or  selling  goods,  wares,  merchandise 
or  commodities  in  the  United  States,  and  not  transacting 
any  business  in  the  United  States  except  such  as  in  the 
judgment  of  the  Federal  Reserve  Board  may  be  inci- 
dental to  its  international  or  foreign  business:  Pro- 
vided, however,  That,  except  with  the  approval  of  the 
Federal  Reserve  Board,  no  corporation  organized  here- 
under shall  invest  in  any  one  corporation  an  amount  in 
excess  of  10  per  centum  of  its  own  capital  and  surplus, 
except  in  a  corporation  engaged  in  the  business  of  bank- 
ing, when  15  per  centum  of  its  capital  and  surplus  may 
be  so  invested:  Provided  further,  That  no  corporation 
organized  hereunder  shall  purchase,  own,  or  hold  stock 
or  certificates  of  ownership  in  any  other  corporation 
organized  hereunder  or  under  the  laws  of  any  State 
which  is  in  substantial  competition  therewith,  or  which 
holds  stock  or  certificates  of  ownership  in  corporations 
which  are  in  substantial  competition  with  the  purchasing 
corporation. 

Nothing  contained  herein  shall  prevent  corporations 
organized  hereunder  from  purchasing  and  holding  stock 
in  any  corporation  where  such  purchase  shall  be  necessary 
to  prevent  a  loss  upon  a  debt  previously  contracted  in 
good  faith;  and  stock  so  purchased  or  acquired  in  cor- 
porations organized  under  this  section  shall  within  six 
months  from  such  purchase  be  sold  or  disposed  of  at 
public  or  private  sale  unless  the  time  to  so  dispose  of 
same  is  extended  by  the  Federal  Reserve  Board. 

No  corporation  organized  under  this  section  shall 
carry  on  any  part  of  its  business  in  the  United  States 


Sbc.  25a.  THE   FEDERAL   RESERVE   ACT.  55 

except  such  as,  in  the  judgment  of  the  Federal  Reserve 

Board,  shall  be  incidental  to  its  international  or  foreign 
business:  And  provided  further,  That  except  such  as  is 
incidental  and  preliminary  to  its  organization  no  such 
corporation  shall  exercise  any  of  the  powers  conferred 
by  this  section  until  it  has  been  duly  authorized  by  the 
Federal  Reserve  Board  to  commence  business  as  a  cor- 
poration organized  under  the  provisions  of  this  section. 

No  corporation  organized  under  this  section  shall 
engage  in  commerce  or  trade  in  commodities  except  as 
specifically  provided  in  this  section,  nor  shall  it  either 
directly  or  indirectly  control  or  fix  or  attempt  to  control 
or  fix  the  price  of  any  such  commodities.  The  charter 
of  any  corporation  violating  this  provision  shall  be  sub- 
ject to  forfeiture  in  the  manner  hereinafter  provided 
in  this  section.  It  shall  be  unlawful  for  any  director, 
officer,  agent,  or  employee  of  any  such  corporation  to 
use  or  to  conspire  to  use  the  credit,  the  funds,  or  the 
power  of  the  corporation  to  fix  or  control  the  price  of  any 
such  commodities,  and  any  such  person  violating  this 
provision  shall  be  liable  to  a  fine  of  not  less  than  $1,000 
and  not  exceeding  $5,000  or  imprisonment  not  less  than 
one  year  and  not  exceeding  five  years,  or  both,  in  the 
discretion  of  the  court. 

No  corporation  shall  be  organized  under  the  provisions 
of  this  section  with"  a  capital  stock  of  less  than  $2,000,000, 
one-quarter  of  which  must  be  paid  in  before  the  corpora- 
tion may  be  authorized  to  begin  business,  and  the 
remainder  of  the  capital  stock  of  such  corporation  shall 
be  paid  in  installments  of  at  least  10  per  centum  on  the 
whole  amount  to  which  the  corporation  shall  be  limited 
as  frequently  as  one  installment  at  the  end  of  each 
succeeding  two  months  from  the  time  of  the  commence- 
ment of  its  business  operations  until  the  whole  of  the 
capital  stock  shall  be  paid  in.  The  capital  stock  of  any 
such  corporation  may  be  increased  at  any  time,  with  the 
approval  of  the  Federal  Reserve  Board,  by  a  vote  of 
two-thirds  of  its  shareholders  or  by  unanimous  consent 
in  writing  of  the  shareholders  without  a  meeting  and 
without  a  formal  vote,  but  any  such  increase  of  capital 
shall  be  fully  paid  in  within  ninety  days  after  such 
approval;  and  may  be  reduced  in  like  manner,  provided 
that  in  no  event  shall  it  be  less  than  $2,000,000.  No 
corporation,  except  as  herein  provided,  shall  during  the 


56  THE   FEDERAL   RESERVE   ACT.  Sec.  25a. 

time  it  shall  continue  its  operations  withdraw  or  permit 
to  be  withdrawn,  either  in  the  form  of  dividends  or 
otherwise,  any  portion  of  its  capital.  Any  national 
banking  association  may  invest  in  the  stock  of  any  cor- 
poration organized  under  the  provisions  of  this  section, 
but  the  aggregate  amount  of  stock  held  in  all  corporations 
engaged  in  business  of  the  kind  described  in  this  section 
and  in  section  25  of  the  Federal  Reserve  Act  as  amended 
shall  not  exceed  10  per  centum  of  the  subscribing  bank's 
capital  and  surplus. 

A  majority  of  the  shares  of  the  capital  stock  of  any 
such  corporation  shall  at  all  times  be  held  and  owned  by 
citizens  of  the  United  States,  by  corporations  the  con- 
trolling interest  in  which  is  owned  by  citizens  of  the 
United  States,  chartered  under  the  laws  of  the  United 
States  or  of  a  State  of  the  United  States,  or  by  firms  or 
companies,  the  controlling  interest  in  which  is  owned  by 
citizens  of  the  United  States.  The  provisions  of  section 
8  of  the  act  approved  October  15,  1914,  entitled  "An 
act  to  supplement  existing  laws  against  unlawful  re- 
straints and  monopolies,  and  for  other  purposes,"  as 
amended  by  the  acts  of  May  15,  1916,  and  September  7, 
1916,  shall  be  construed  to  apply  to  the  directors,  other 
officers,  agents,  or  employees  of  corporations  organized 
under  the  provisions  of  this  section:  Provided,  however, 
That  nothing  herein  contained  shall'  (1)  prohibit  any 
director  or  other  officer,  agent  or  employee  of  any  member 
bank,  who  has  procured  the  approval  of  the  Federal 
Reserve  Board  from  serving  at  the  same  time  as  a  director 
or  other  officer,  agent  or  employee  of  any  corporation 
organized  under  the  provisions  of  this  section  in  whose 
capital  stock  such  member  bank  shall  have  invested;  or 
(2)  prohibit  any  director  or  other  officer,  agent,  or 
employee  of  any  corporation  organized  under  the  pro- 
visions of  this  section,  who  has  procured  the  approval  of 
the  Federal  Reserve  Board,  from  serving  at  the  same 
time  as  a  director  or  other  officer,  agent  or  employee  of 
any  other  corporation  in  whose  capital  stock  such  first- 
mentioned  corporation  shall  have  invested  under  the 
provisions  of  this  section. 

No  member  of  the  Federal  Reserve  Board  shall  be  an 
officer  or  director  of  any  corporation  organized  under 
the  provisions  of  this  section,  or  of  any  corporation  en- 
gaged in  similar  business  organized  under  the  laws  of 


Sec.  25a.  -JHE   FEDERAL   RESKIIVK    ACT.  57 

any  State,  nor  hold  stock  in  any  such  corporation,  and 

before  entering  upon  his  duties  as  a  member  of  the 
Federal  Reserve  Board  he  shall  certify  mule;'  oath  to 
the  Secretary  of  the  Treasury  that  he  has  complied  with 
this  requirement. 

Shareholders  in  any  corporation  organized  under  the 
provisions  of  this  section  shall  be  liable  for  the  amount 
of  their  unpaid  stock  subscriptions.  No  such  corpora- 
tion shall  become  a  member  of  any  Federal  reserve  bank. 
Should  any  corporation  organized  hereunder  violate 
or  fail  to  comply  with  any  of  the  provisions  of  this  sec- 
tion, all  of  its  rights,  privileges,  and  franchises  derived 
herefrom  may  thereby  be  forfeited.  Before  any  such 
corporation  shall  be  declared  dissolved,  or  its  rights, 
privileges,  and  franchises  forfeited,,  any  noncompliance 
with,  or  violation  of  such  laws  shall,  however,  be  deter- 
mined and  adjudged  by  a  court  of  the  United  States  of 
competent  jurisdiction,  in  a  suit  brought  for  that  purpose 
in  the  district  or  territory  in  which  the  home  office  of 
such  corporation  is  located,,  which  suit  shall  be  brought 
by  the  United  States,  at  the  instance  of  the  Federal 
Reserve  Board  or  the  Attorney  General.  Upon  adjudi- 
cation of  such  noncompliance  or  violation,  each  director 
and  officer  who  participated  in,  or  assented  to,  the  illegal 
act  or  acts,  shall  be  liable  in  his  personal  or  individual 
capacity  for  all  damages  widen  the  said  corporation  shall 
have  sustained  in  consequence  thereof.  Xo  dissolution 
shall  take  away  or  impair  any  remedy  against  the  cor- 
poration, its  stockholders,  or  officers  for  any  liability  or 
penalty  previously  incurred. 

Any  such  corporation  may  go  into  voluntary  lit j ni- 
dation and  be  closed  by  a  vote  of  its  shareholders  owning 
two-thirds  of  its  stock- 
Whenever  the  Federal  Reserve  Board  shall  become 
satisfied  of  the  insolvency  of  any  such  corporation,  it 
may  appoint  a  receiver  who  shall  take  possession  of  all  of 
the  property  and  assets  of  the  corporation  and  exerrcisfli 
the  same  rights,  privileges,  powers,  and  authority  with 
respect  thereto  as  are  now  exercised  by  receivers  of 
national  banks  appointed  by  the  Comptroller  of  the 
Currency  of  the  United  States:  Provided,  however,  That 
the  assets  of  the  corporation  subject  to  the  laws  of  other 
countries  or  jurisdictions  shall  be  dealt  with  in  accordance 
with  the  terms  of  such  laws. 


58  THE   FEDERAL   RESERVE   ACT.  Sec.  25a. 

Every  corporation  organized  under  the  provisions  of 
this  section  shall  hold  a  meeting  of  its  stockholders  an- 
nually upon  a  date  fixed  in  its  by-laws,  such  meeting  to 
be  held  at  its  home  office  in  the  United  States.  Every 
such  corporation  shall  keep  at  its  home  office  books  con- 
taining the  names  of  all  stockholders  thereof,  and  the 
names  and  addresses  of  the  members  of  its  board  of  di- 
rectors, together  with  copies  of  all  reports  made  by  it  to 
the  Federal  Reserve  Board.  Every  such  corporation  shall 
make  reports  to  the  Federal  Reserve  Board  at  such  times 
and  in  such  form  as  it  may  require;  and  shall  be  subject 
to  examination  once  a  year  and  at  such  other  times  as 
may  be  deemed  necessary  by  the  Federal  Reserve  Board 
by  examiners  appointed  by  the  Federal  Reserve  Board, 
the  cost  of  such  examinations,  including  the  compensa- 
tion of  the  examiners,  to  be  fixed  by  the  Federal  Reserve 
Board  and  to  be  paid  by  the  corporation  examined. 

The  directors  of  any  corporation  organized  under  the 
provisions  of  this  section  may,  semiannually,  declare  a 
dividend  of  so  much  of  the  net  profits  of  the  corporation 
as  they  shall  judge  expedient;  but  each  corporation  shall  ? 
before  the  declaration  of  a  dividend,  carry  one-tenth  of 
its  net  profits  of  the  preceding  half  year  to  its  surplus 
fund  until  the  same  shall  amount  to  20  per  centum  of  its 
capital  stock. 

Any  corporation  organized  under  the  provisions  of  this 
section  shall  be  subject  to  tax  by  the  State  within  which 
its  home  office  is  located  in  the  same  manner  and  to  the 
same  extent  as  other  corporations  organized  under  the 
laws  of  that  State  which  are  transacting  a  similar  char- 
acter of  business.  The  shares  of  stock  in  such  corporation 
shall  also  be  subject  to  tax  as  the  personal  property  of 
the  owners  or  holders  thereof  in  the  same  manner  and  to 
the  same  extent  as  the  shares  of  stock  in  similar  State 
corporations. 

Any  corporation  organized  under  the  provisions  of  this 
section  may  at  any  time  within  the  two  years  next  pre- 
vious to  the  date  of  the  expiration  of  its  corporate 
existence,  by  a  vote  of  the  shareholders  owning  two- 
thirds  of  its  stock,  apply  to  the  Federal  Reserve  Board 
for  its  approval  to  extend  the  period  of  its  corporate 
existence  for  a  term  of  not  more  than  twenty  years,  and 
upon  certified  approval  of  the  Federal  Reserve  Board 
such  corporation  shall  have  its  corporate  existence  for 


Sue.  25a.  THE   FEDERAL   RESERVE   ACT.  59 

such  extended  period  unless  sooner  dissolved  by  the  act 
of  the  shareholders  owning  two-thirds  of  its  stock,  or  by 
an  Act  of  Congress  or  unless  its  franchise  becomes  for- 
feited by  some  violation  of  law. 

Any  bank  or  banking  institution,  principally  engaged 
in  foreign  business,  incorporated  by  special  law  of  any 
State  or  of  the  United  States  or  organized  under  the  gen- 
eral laws  of  any  State  or  of  the  United  States  and  having 
an  unimpaired  capital  sufficient  to  entitle  it  to  become  a 
corporation  Under  the  provisions  of  this  section  may,  by 
the  vote  of  the  shareholders  owning  not  less  than  two- 
thirds  of  the  capital  stock  of  such  bank  or  banking  asso- 
ciation, with  the  approval  of  the  Federal  Reserve  Board, 
be  converted  into  a  Federal  corporation  of  the  kind 
authorized  by  this  section  with  any  name  approved  by  the 
Federal  Reserve  Board:  Provided,  however,  That  said  con- 
version shall  not  be  in  contravention  of  the  State  law. 
In  such  case  the  articles  of  association  and  organization 
certificate  may  be  executed  by  a  majority  of  the  directors 
of  the  bank  or  banking  institution,  and  the  certificate 
shall  declare  that  the  owners  of  at  least  two-thirds  of  the 
capital  stock  have  authorized  the  directors  to  make  such 
certificate  and  to  change  or  convert  the  bank  or  banking 
institution  into  a  Federal  corporation.  A  majority  of  the 
directors,  after  executing  the  articles  of  association  and 
the  organization  certificate,  shall  have  power  to  execute 
all  other  papers  and  to  do  whatever  may  be  required  to 
make  its  organization  perfect  and  complete  as  a  Federal 
corporation.  The  shares  of  any  such  corporation  may 
continue  to  be  for  the  same  amount  each  as  they  were 
before  the  conversion,  and  the  directors  may  continue 
to  be  directors  of  the  corporation  until  others  are  elected 
or  appointed  in  accordance  with  the  provisions  of  this 
section.  When  the  Federal  Reserve  Board  has  given  to 
such  corporation  a  certificate  that  the  provisions  of  this 
section  have  been  complied  with,  such  corporation  and 
all  its  stockholders,  officers,  and  employees,  shall  have 
the  same  powers  and  privileges,  and  shall  be  subject  fo 
the  same  duties,  liabilities,  and  regulations,  in  all  respects, 
as  shall  have  been  prescribed  by  this  section  for  cor- 
porations originally  organized  hereunder. 

Every  officer,  director,  clerk,  employee,  or  agent  of  any 
corporation  organized  under  this  section  who  embezzles, 
abstracts,  or  willfully  misapplies  any  of  the  moneys,  funds, 


60  THE   FEDERAL   RESERVE   ACT.  Sec.  25a. 

credits,  securities,  evidences  of  indebtedness  or  assets  of 
any  character  of  such  corporation;  or  who,  without  au- 
thority from  the  directors,  issues  or  puts  forth  any  certifi- 
cate of  deposit,  draws  any  order  or  bill  of  exchange,  makes 
any  acceptance,  assigns  any  note,  bond,  debenture,  draft, 
bill  of  exchange,  mortgage,  judgment,  or  decree;  or  who 
makes  any  false  entry  in  any  book,  report,  or  statement 
of  such  corporation  with  intent,  in  either  case,  to  injure 
or  defraud  such  corporation  or  any  other  company,  body 
politic  or  corporate,  or  any  individual  person,  or  to  deceive 
any  officer  of  such  corporation,  the  Federal  Reserve  Board, 
or  any  agent  or  examiner  appointed  to  examine  the  affairs 
of  any  such  corporation;  and  every  receiver  of  any  such 
corporation  and  every  clerk  or  employee  of  such  receiver 
who  shall  embezzle,  abstract,  or  willfully  misapply  or 
wrongfully  convert  to  his  own  use  any  moneys,  funds, 
credits,  or  assets  of  any  character  which  may  come  into 
his  possession  or  under  his  control  in  the  execution  of  his 
trust  or  the  performance  of  the  duties  of  his  employment; 
and  every  such  receiver  or  clerk  or  emplo}Tee  of  such  re- 
ceiver who  shall,  with  intent  to  injure  or  defraud  any  per- 
son, body  politic  or  corporate,  or  to  deceive  or  mislead  the 
Federal  Reserve  Board,  or  any  agent  or  examiner  ap- 
pointed to  examine  the  affairs  of  such  receiver,  shall  make 
any  false  entry  in  any  book,  report,  or  record  of  any  mat- 
ter connected  with  the  duties  of  such  receiver;  and  every 
person  who  with  like  intent  aids  or  abets  any  officer,  di- 
rector, clerk,  employee,  or  agent  of  any  corporation  or- 
ganized under  this  section,  or  receiver  or  clerk  or  employee 
of  such  receiver  as  aforesaid  in  any  violation  of  this  sec- 
tion, shall  upon  conviction  thereof  be  imprisoned  for  not 
less  than  two  years  nor  more  than  ten  years,  and  may  also 
be  fined  not  more  than  $5,000,  in  the  discretion  of  the 
court. 

Whoever  being  connected  in  any  capacity  with  any  cor- 
poration organized  under  this  section  represents  in  any 
way  that  the  United  States  is  liable  for  the  payment  of 
any  bond  or  other  obligation,  or  the  interest  thereon,  is- 
sued or  incurred  by  any  corporation  organized  hereunder, 
or  that  the  United  States  incurs  any  liability  in  respect 
of  any  act  or  omission  of  the  corporation,  shall  be  pun- 
ished by  a  fine  of  not  more  than  $10,000  and  by  imprison- 
ment for  not  more  than  five  years. 


Secs.  26,  27.  THE    FEDERAL    RESERVE    ACT.  61 

Sec.  26.  All  provisions  of  law  inconsistent  with  or  super- 
sede! by  any  of  the  provisions  of  this  Act  arc  to  that 
extent  and  to  that  extent  only  hereby  repeated  :  Provided, 
Nothing  in  this  Act  contained  shall  be  construed  fco  repeal 
the  parity  provision  or  provisions  contained  in  an  Act 
approved  March  fourteenth,  nineteen  hundred,  entitled 
"An  Act  to  define  and  fix  the  standard  of  value,  to  main- 
tain the  parity  of  all  forms  of  money  issued  or  coined  hy 
the  United  States,  to  refund  the  puhlic  debt,  and  for  other 
purposes,"  and  the  Secretary  of  the  Treasury  may,  for  the 
purpose  of  maintaining  such  parity  and  to  strengthen 
the  gold  reserve,  borrow  gold  on  the  security  of  United 
States  bonds  authorized  by  section  two  of  the  Act  last 
referred  to  or  for  one-year  gold  notes  bearing  interest  at  a 
rate  of  not  to  exceed  three  per  centum  per  annum,  or  sell 
the  same  if  necessary  to  obtain  gold.  When  the  funds  of 
the  Treasury  on  hand  justify,  he  may  purchase  and  retire 
such  outstanding  bonds  and  notes. 

Sec.  27.  The  provisions  of  the  Act  of  May  thirtieth,  ac^appfov^ 
nineteen  hundred  and  eight,  authorizing  national  stAt',  4682,91chap8. 
currency  associations,  the  issue  of  additional  national- 225)' 
bank  circulation,  and  creating  a  National  Monetary  Com- 
mission, which  expires  by  limitation  under  the  terms  of 
such  Act  on  the  thirtieth  day  of  June,  nineteen  hundred 
and  fourteen,  are  hereby  extended  to  June  thirtieth,  nine- 
teen hundred  and  fifteen,  and  sections  fifty-one  hundred 
and  fifty-three,  fifty-one  hundred  and  seventy-two,1  fifty- 
one  hundred  and  ninety-one,  and  fifty-two  hundred  and 
fourteen  of  the  Revised  Statutes  of  the  United  States, 
which  were  amended  by  the  Act  of  May  thirtieth,  nineteen 
hundred  and  eight,  are  hereby  rcenacted  to  read  as  such 
sections  read  prior  to  May  thirtieth,  nineteen  hundred  and 
eight,  subject  to  such  amendments  or  modifications  as  are 
prescribed  in  this  Act:  Provided,  however,  That  section 
nine  of  the  Act  first  referred  to  in  this  section  is  hereby 
amended  so  as  to  change  the  tax  rates  fixed  in  said  Act 
by  making  the  portion  applicable  thereto  read  as  follows: 

National  banking  associations  having  circulating  notes 
secured  otherwise  than  by  bonds  of  the  United  States, 
shall  pay  for  the  first  three  months  a  tax  at  the  rate  of 
three  per  centum  per  annum  upon  tht.  average  amount  of 
such  of  their  notes  in  circulation  as  are  based  upon  the 
deposit  of  such  securities,  and  afterwards  an  additional 

i  Amended  as  to  section  5172,    Revised  Statutes,  by  act  approved  March  3,  1919. 
See  appendix. p.  76. 


62  THE    FEDERAL    RESERVE   ACT.  Secs.  27, 28. 

tax  rate  of  one-half  of  one  per  centum  per  annum  for  ea:h 
month  until  a  tax  of  six  per  centum  per  annum  is  reached, 
and  thereafter  such  tax  of  six  per  centum  per  annum 
upon  the  average  amount  of  such  notes:  Provided  further , 
That  whenever  in  his  judgment  he  may  deem  it  desirable, 
the  Secretary  of  the  Treasury  shall  have  power  to  suspend 
the  limitations  imposed  by  section  one  and  section  three 
of  the  Act  referred  to  in  this  section,  which  prescribe 
that  such  additional  circulation  secured  otherwise  than  by 
bonds  of  the  United  States  shall  be  issued  only  to  Na- 
tional banks  having  circulating  notes  outstanding  secured 
by  the  deposit  of  bonds  of  the  United  States  to  an  amount 
not  less  than  forty  per  centum  of  the  capital  stock  of  such 
banks,  and  to  suspend  also  the  conditions  and  limitations 
of  section  five  of  srid  Act  except  that  no  bank  shall  be 
permitted  to  issue  circulating  notes  in  excess  of  one  hun- 
dred and  twenty-five  per  centum  of  its  unimpaired 
capital  and  surplus.  He  shall  require  each  bank  and 
currency  association  to  maintain  on  deposit  in  the  Treas- 
ury of  the  United  States  a  sum  in  gold  sufficient  in  his 
judgment  for  the  redemption  of  such  notes,  but  in  no 
event  less  than  five  per  centum.  He  may  permit 
National  banks,  during  the  period  for  which  such 
provisions  are  suspended,  to  issue  additional  circula- 
tion under  the  terms  and  conditions  of  the  Act  referred 
to  as  herein  amended:  Provided  further,  That  the  Secre- 
tary of  the  Treasury,  in  his  discretion,  is  further  author- 
ized to  extend  the  benefits  of  this  Act  to  all  qualified 
State  banks  and  trust  companies,  which  have  joined  the 
Federal  reserve  system,  or  which  may  contract  to  join 
within  fifteen  days  after  the  passage  of  this  Act. 

Sec.  28.  Section  fifty-one  hundred  and  forty-three  of 
the  Revised  Statutes  is  hereby  amended  and  reenacted 
to  read  as  follows:  Any  association  formed  under  this 
title  may,  by  the  vote  of  shareholders  owning  two-thirds 
of  its  capital  stock,  reduce  its  capital  to  any  sum  not 
below  the  amount  required  by  this  title  to  authorize  the 
formation  of  associations;  but  no  such  reduction  shall  be 
allowable  which  will  reduce  the  capital  of  the  association 
below  the  amount  required  for  its  outstanding  circula- 
tion, nor  shall  any  reduction  be  made  until  the  amount 
of  the  proposed  reduction  has  been  reported  to  the  Comp- 
troller of  the  Currency  and  such  reduction  has  been  ap- 
proved by  the  said  Comptroller  of  the  Currency  and  by 
the  Federal  Reserve  Board,  or  by  the  organization  com" 


Sues.  29, 30.  THE    FEDERAL    RESERVE   ACT.  (io* 

mittee  pending  the  organization  of  the  Federal  Reserve 
Board. 

Sec.  29.  If  any  clause,  sentence,  paragraph,  or  part  of 

this  Act shall  for  any  reason  be  adjudged  by  any  court  of 
competent  jurisdiction  to  be  invalid,  such  judgment  shall 
not  affect,  impair,  or  invalidate  the  remainder  of  this  Act, 
but  shall  be  confined  in  its  operation  to  the  clause,  sen- 
tence, paragraph,  or  part  thereof  directly  involved  in  the 
controversy  in  which  such  judgment  shall  have  been 
rendered. 

Sec.  30.  The  right  to  amend,  alter,  or  repeal  this  Act 
is  hereby  expressly  reserved. 


APPENDIX. 

Provisions  of  other  Acts  of  Congress  which  affect  Federal 
Reserve  Banks  and  member  banks  of  the  Federal  Re- 
serve System. 

CLAYTON  ANTI-TRUST  ACT,  APPROVED  OCTOBER  15, 
1914,  AS  AMENDED  BY  THE  KERN  AMENDMENT, 
APPROVED  MAY  15,  1916,  AS  AMENDED  BY  THE 
ACT  APPROVED  MAY  26,  1920.1 

Sec.  8.  That  from  and  after  two  years  from  the  date  of 
the  approval  of  this  Act  no  person  shall  at  the  same  time 
be  a  director  or  other  officer  or  employee  of  more  than 
one  bank,  banking  association,  or  trust  company  organ- 
ized or  operating  under  the  laws  of  the  United  States, 
either  of  which  has  deposits,  capital,  surplus,  and  undi- 
vided profits  aggregating  more  than  $5,000,000;  and  no 
private  banker  or  person  who  is  a  director  in  any  bank  or 
trust  company  organized  and  operating  under  the  laws 
of  a  State,  having  deposits,  capital,  surplus,  and  undi- 
vided profits  aggregating  more  than  $5,000,000,  shall  be 
eligible  to  be  a  director  in  any  bank  or  banking  associa- 
tion organized  or  operating  under  the  laws  of  the  United 
States.  The  eligibility  of  a  director,  officer,  or  employee 
under  the  foregoing  provisions  shall  be  determined  by  the 
average  amount  of  deposits,  capital,  surplus,  and  un- 
divided profits  as  shown  in  the  official  statements  of  such 
bank,  banking  association,  or  trust  company  filed  as  pro- 
vided by  law  during  the  fiscal  year  next  preceding  the 
date  set  for  the  annual  election  of  directors,  and  when  a 
director,  officer,  or  employee  has  been  elected  or  selected 
in  accordance  with  the  provisions  of  this  Act  it  shall  be 
lawful  for  him  to  continue  as  such  for  one  year  thereafter 
under  said  election  or  employment. 

No  bank,  banking  association,  or  trust  company  organ- 
ized or  operating  under  the  laws  of  the  United  States,  in 
any  city  or  incorporated  town  or  village  of  more  than 
two  nundred  thousand  inhabitants,  as  shown  by  the  last 
preceding  decennial  census  of  the  United  States,  shall 
have  as  a  director  or  other  officer  or  employee  any  private 
banker  or  any  director  or  other  officer  or  employee  of  any 
other  bank,  banking  association,  or  trust  company  located 

»  Amended  by  sec.  25  of  Federal  Reserve  Act,  as  amended  Sept.  7,  1916;  and 
amended  by  act  approved  Dec.  24,  1919,  amending  the  Federal  Reserve  Act,  as  to 
corporations  engaged  in  foreign  banking  and  financial  operations.  See  ante,  pp.  51 
and  56. 

64 


APPENDIX.  G5 

in  the  same  place:  Provided,  That  nothing  id  this  section 
shall  apply  to  mutual  savings  banks  not  having  a  capital 
stock  represented  by  shares:  Provided  further,  That  a 
director  or  other  officer  or  employee  of  such  bank,  1. unk- 
ing association,  or  trust  company  may  be  a  director  or 
other  officer  or  employee  of  not  more  than  one  other  bank 
or  trust  company  organized  under  the  laws  of  the  United 
States  or  any  State  where  the  entire  capita!  sloe]-:  of  one 
is  owned  by  stockholders  in  the  other:  And  provided 
ther,  That  nothing  contained  in  this  section  shall  forbid  a 
dire,  tor  of  class  A  of  a  Federal  reserve  bank,  as 
in  the  Federal  Reserve  Act,  from  being  an  officer  or  direc- 
tor, or  both  an  officer  and  director,  in  one  member  bank: 
And  provided  further,  That  nothing  in  this  Act  shall  pro- 
hibit any  private  banker  or  any  officer,  director,  or  em- 
ployee of  any  member  bank  or  class  A  director  of  a  Fed- 
eral reserve  bank,  who  shall  first  procure  the  consent 
of  the  Federal  Reserve  Board,  which  board  is  hereby 
authorized,  at  its  discretion,  to  grant,  withhold,  or  re- 
voke such  consent,  from  being  an  officer,  director,  or 
employee  of  not  more  than  two  other  banks,  banking 
associations,  or  trust  companies,  whether  organized  under 
the  laws  of  the  United  States  or  any  State,  if  such  other 
bank,  banking  association,  or  trust  company  is  not  in 
substantial  competition  with  such  banker  or  member 
bank. 

The  consent  of  the  Federal  Reserve  Board  may  be  pro- 
cured before  the  person  applying  therefor  has  been  elected 
as  a  class  A  director  of  a  Federal  reserve  bank  or  as  a 
director  of  any  member  bank. 

:j:  *  *  *  # 

When  tmy  person  elected  or  chosen  as  a  director  or 
officer  or  selected  ;is  an  employee  of  any  bank  or  other 
corporation  subject  to  the  provisions  of  this  Act  is  eligi- 
ble at  the  time  of  his  election  or  selection  to  act  for  such 
bank  or  other  corporation  in  such  capacity  his  eligibility 
to  act  in  such  capacity  shall  not  be  affected  and  he  shall 
not  become  or  be  deemed  amenable  to  any  of  the  pro- 
visions hereof  by  reason  of  any  change  in  the  affairs  of 
such  bank  or  other  corporation  from  whatsoever  cause, 
whether  specifically  excepted,  by  any  of  the  provisions 
hereof  or  not,  Until  the  expiration  of  one  year  from  the 
date  of  his  election  or  employment. 
8881°— 20 5 


60  APPENDIX. 

DEPOSIT  OF  POSTAL  SAVINGS  FUNDS  IN  MEMBER 
OR  NONMEMBER  BANKS. 

Section  2  of  the  Postal  Savings  Act,  approved  June  25,  1910,  as 
amended  by  the  Act  approved  May  18,  1916. 

*  *  *  *  * 

postal  savings  funds  received  under  the 
provisions  of  this  Act  shall  be  deposited  in  solvent  banks, 

ther  organized  under  National  or  State  laws,  and 
ember  banks  or  not  of  the  Federal  Reserve 
established  by  the  Act  approved  December 
twenty-third,  nineteen  hundred  and  thirteen,  being  sub- 
to  National  or  State  supervision  and  examina- 
tion *  *  *.  The  funds  received  at  the  postal  sav- 
ing's depository  offices  in  each  city,  town,  village,  and 
other  locality  shall  be  deposited  in  banks  located  therein 
(substantially  in  proportion  to  the  capital  and  surplus  of 
each  such  bank)  willing  to  receive  such  deposits  under 
the  terms  of  this  Act  and  the  regulations  made  by  authority 
thereof:  Provided,  however,  If  one  or  more  member  banks 
of  the  Federal  Reserve  System  established  by  the  Act 
approved  December  twenty-third,  nineteen  hundred  and 
thirteen,  exists  in  the  city,  town,  village,  or  locality 
where  the  postal  savings  deposits  are  made,  such  deposits 
shall  be  placed  in  such  qualified  member  banks  substan- 
tially in  proportion  to  the  capital  and  surplus  of  each 
such  bank,  but  if  such  member  banks  fail  to  qualify  to 
receive  such  deposits,  then  any  other  bank  located  therein 
may,  as  hereinbefore  provided,  qualify  and  receive  the 
same.  If  no  such  member  bank  and  no  other  qualified 
bank  exists  in  any  city,  town,  village,  or  locality,  or  if 
none  where  such  deposits  are  made  will  receive  such 
deposits  on  the  terms  prescribed,  then  such  funds  shall 
be  deposited  under  the  terms  of  this  Act  in  the  bank 
most  convenient  to  sueh  locality.    *     *     *." 

DEPOSIT  OF  FUNDS  OF  FARM  LAND  BANKS  IN  MEMBER, 
BANKS— FEDERAL  RESERVE  BANKS  AND  MEMBER 
BANKS  AUTHORIZED  TO  BUY  AND  SELL  FARM  LOAN 
BONDS. 

done  5, 6,  13,  and  27  of  the  Farm  Loan  Act,  approved  July  17,  L916. 
Sec.  5. — 

9p  9|C  •!•  *f»  5(s 

At    Least   twenty-ftye   per  centum  of  thai    part  of  the 
capita]  of  any  Federal  land  bank  for  which  stock  is  out- 


APPENDIX.  67 

standing  in  the  name  of  national  farm  loan  associations 
shall  be  held  in  quick  assets,  and  may  consist  of  cash  in 
the  vaults  of  said  land  bank,  or  in  deposits  in  member 
banks  of  the  Federal  reserve  system,  or  in  readily  market- 
able securities  which  are  approved  under  rules  and  regu- 
lations of  the  Federal  Farm  Loan  Board:  Provided,  That 
not  less  than  five  per  centum  of  such  capital  shall  bo 
invested  in  United  States  Government  bonds. 

GOVERNMENT    DEPOSITARIES. 

Sec.  6.  That  all  Federal  land  banks  and  joint  stock 
land  banks  organized  under  this  Act,  when  designated  for 
that  purpose  by  the  Secretary  of  the  Treasury,  shall  be 
depositaries  of  public  money,  except  receipts  from  cus- 
toms, under  such  regulations  as  may  be  prescribed  by 
said  Secretary;  and  they  may  also  be  emploj^ed  as 
financial  agents  of  the  Government;  and  they  shall 
perform  all  such  reasonable  duties,  as  depositaries  of 
public  money  and  financial  agents  of  the  Government, 
as  may  be  required  of  them.  And  the  Secretary  of  the 
Treasury  shall  require  of  the  Federal  land  banks  and 
joint  stock  land  banks  thus  designated  satisfactory 
security,  by  the  deposit  of  United  States  bonds  or  other- 
wise, for  the  safekeeping  and  prompt  payment  of  the 
public  money  deposited  with  them,  and  for  the  faithful 
performance  of  their  duties  as  financial  agents  of  the 
Government.  No  Government  funds  deposited  under 
the  provisions  of  this  section  shall  be  invested  in  mort- 
gage loans  or  farm  loan  bonds. 

POWERS  OF  FEDERAL  LAND  BANKS. 

Sec.  13.  That  every  Federal  land  bank  shall  have 
power,  subject  to  the  limitations  and  requirements  of 
this  Act — 

***** 

Fifth.  To  deposit  its  securities,  and  its  current  funds 
subject  to  check,  with  any  member  bank  of  the  Federal 
Reserve  System,  and  to  receive  interest  on  the  same  as 
may  be  agreed. 

INVESTMENT  IN  FARM  LOAN  BONDS. 

Sec.  27.  That  farm  loan  bonds  issued  under  the  pro- 
visions of  this  Act  by  Federal  land  banks  or  joint  stock 
land  banks  shall  be  a  lawful  investment  for  all  fiduciary 


68  APPENDIX. 

and  trust  funds,  and  may  be  accepted  as  security  for  all 
public  deposits. 

Any  member  bank  of  the  Federal  Reserve  System  may 
buy  and  sell  farm  loan  bonds  issued  under  the  authority 
of  this  Act. 

Any  Federal  reserve  bank  may  buy  and  sell  farm  loan 
bonds  issued  under  this  Act  to  the  same  extent  and  sub- 
ject to  the  same  limitations  placed  upon  the  purchase  and 
sale  by  said  banks  of  State,  county,  district,  and  munici- 
pal bonds  under  subsection  (b)  of  section  fourteen  of  the 
Federal  Reserve  Act  approved  December  twenty-third, 
nineteen  hundred  and  thirteen. 

DEPOSIT  OF  PROCEEDS  OF  SALE  OF  LIBERTY  BONDS. 

Section  7  of  the  First  Liberty  Bond  Act,  approved  April  24,  1917. 1 

Sec.  7.  That  the  Secretary  of  the  Treasury,  in  his  dis- 
cretion, is  hereby  authorized  to  deposit  in  such  banks  and 
trust  companies  as  he  may  designate  the  proceeds,  or  any 
part  thereof,  arising  from  the  sale  of  the  bonds  and  cer- 
tificates of  indebtedness  authorized  by  this  Act,  or  the 
bonds  previously  authorized  as  described  in  section  four 
of  this  Act,  and  such  deposits  may  bear  such  rate  of 
interest  and  be  subject  to  such  terms  and  conditions  as 
the  Secretary  of  the  Treasury  may  prescribe:  Provided, 
That  the  amount  so  deposited  shall  not  in  any  case  exceed 
the  amount  withdrawn  from  any  such  bank  or  trust  com- 
pany and  invested  in  such  bonds  or  certificates  of  indebt- 
edness plus  the  amount  so  invested  by  such  bank  or  trust 
company,  and  such  deposits  shall  be  secured  in  the  man- 
ner required  for  other  deposits  by  section  fifty-one  hun- 
dred and  fifty-three,  Revised  Statutes,  and  amendments 
thereto:  Provided  further,  That  the  provisions  of  section 
fifty-one  hundred  and  ninety-one  of  the  Revised  Statutes, 
as  amended  by  the  Federal  Reserve  Act  and  the  amend- 
ments thereof,  with  reference  to  the  reserves  required 
to  be  kept  by  national  banking  associations  and  other 
member  banks  of  the  Federal  Reserve  System,  shall  not 
apply  to  deposits  of  public  moneys  by  the  United  States 
in  designated  depositaries. 

'This  section  in  effect  amends  section  15,  Federal  Reserve  Act,  which  relates  to 
Go  verument  deposits;  also  section  19  which  prescribes  reserve  requirements  of  member 
banks 


APPENDIX.  69 

DEPOSIT  OF  PROCEEDS  OF  SALE  OF  LIBERTY  BONDS. 

Section  8  of  the  Second  Liberty  Bond  Act,  approved 
September  24,  1917.1 

Sec.  8.  That  the  Secretary  of  the  Treasury,  in  bis 
discretion,  is  hereby  authorized  to  deposit,  in  such  incor- 
porated banks  and  trust  companies  as  he  may  designate, 
the  proceods,  or  any  part  thereof,  arising  from  the  sale 
of  the  bonds  and  certificates  of  indebtedness  and  war- 
savings  certificates  authorized  by  this  Act,  and  such 
deposits  shall  bear  such  rate  or  rates  of  interest,  and 
shall  be  secured  in  such  manner,  and  shall  be  made  upon 
and  subject  to  such  terms  and  conditions,  as  tho  Secret,-!  i  y 
of  the  Treasury  may  from  time  to  time  prescribe:  Pro- 
vided, That  tho  provisions  of  section  fifty-one  hundred 
and  ninety-one  of  the  Revised  Statutes,  as  amended  by 
the  Federal  Reserve  Act,  and  the  amendments  thereof, 
with  reference  to  the  reserves  required  to  be  kept  by 
national  banking  associations  and  other  member  banks 
of  the  Federal  Reserve  System,  shall  not  apply  to  deposits 
of  public  moneys  by  the  United  States  in  designated 
depositaries.  The  Secretary  of  the  Treasury  is  hereby 
authorized  to  designate  depositaries  in  foreign  countries, 
with  which  shall  be  deposited  all  public  money  which  it 
may  be  necessaiy  or  desirable  to  have  on  deposit  in  such 
countries  to  provide  for  current  disbursements  to  the 
military  and  naval  forces  of  the  United  States  and  to  the 
diplomatic  and  consular  and  other  representatives  of  the 
United  States  in  and  about  such  countries  until  six 
months  after  the  termination  of  the  war  between  the 
United  States  and  the  Imperial  German  Government, 
and  to  prescribe  the  terms  and  conditions  of  such  deposits, 

DEPOSIT  OF  PROCEEDS  OF  SALE  OF  LIBERTY  BONDS. 

Section  8  of  the  Third  Liberty  Bond  Act,  approved  April 

4,   1918.2 

Sec.  8.  That  the  Secretary  of  the  Treasury,  in  his  dis- 
cretion, is  hereby  authorized  to  deposit,  in  such  incor- 
porated banks  and  trust  companies  as  he  may  designate, 
the  proceeds,  or  any  part  thereof,  arising  from  the  sale  of 

1  This  section  in  effect  amends  section  15,  Federal  Reserve  Act,  which  relates  to 
Government  deposits;  also  section  19  which  prescribes  reserve  requirements  of  member 
banks. 

2 This  section  further  amends  section  15,  Federal  Reserve  Act,  which  relates  to  Gov- 
ernment deposits,  and  section  1C,  which  prescribes  reserves  of  member  banks. 


70  APPENDIX. 

the  bonds  and  certificates  of  indebtedness  and  war-savings 
certificates  authorized  by  this  Act,  and  arising  from  the 
payment  of  income  and  excess  profits  taxes,  and  such 
deposits  shall  bear  such  rate  or  rates  of  interest,  and  shall 
be  secured  in  such  manner,  and  shall  bo  made  upon  and 
subject  to  such  terms  and  conditions  as  the  Secretary  of 
the  Treasury  may  from  time  to  time  prescribe:  Pro 
That  the  provisions  of  section  fifty-one  hundred  and 
ninety-one  of  the  Revised  Statutes,  as  amended  by  the 
Federal  Reserve  Act,  and  the  amendments  thereof,  with 
reference  to  the  reserves  required  to  be  kept  by  national 
banking  associations  and  other  member  banks  of  the 
Federal  Reserve  System,  shall  not  apply  to  deposits  of 
public  moneys  by  the  United  States  in  designated  de- 
depositaries.  The  Secretary  of  the  Treasury  is  hereby 
authorized  to  designate  depositaries  in  foreign  countries 
with  which  shall  be  deposited  all  public  money  which  it 
may  be  necessary  or  desirable  to  have  on  deposit  in  such 
countries  to  provide  for  current  disbursements  to  the 
military  and  naval  forces  of  the  United  States  and  to  the 
diplomatic  and  consular  and  other  representatives  of  the 
r  1 1  ii  ed  States  in  and  about  such  countries  until  six  months 
after  the  termination  of  the  war  between  the  United 
States  and  the  Imperial  German  Government,  and  to 
prescribe  the  terms  and  conditions  of  such  deposits. 

PURCHASE  AND  DISCOUNT  BY  FEDERAL  RESERVE 
BANKS  OF  OBLIGATIONS  SECURED  BY  BONDS  OF 
WAR  FINANCE  CORPORATION— FEDERAL  RESERVE 
NOTES  ISSUED  AGAINST  SECURITY  OF  SUCH  OBLI- 
GATIONS. 

Section    13   of  War   Finance  Corporation   Act,   approved 
April  5,  1918.1 

Sec  13.  That  the  Federal  reserve  banks  shall  be  au- 
thorized, subject  to  tho  maturity  limitations  of  the  Fed- 
eral  Reserve  Ad  and  to  regulations  of  the  Federal  Ro- 
se]  i  Board,  to  discount  the  direct  obligations  of  member 
banks  secured  by  such  bonds  of  the  Corporation  and  to 
count  eligible  paper  secured  by  such  bonds  and 
indorsed  by  a  member  bank.  No  discount  or  rediscount 
under  this  section  shall  be  granted  at  a  less  interest 
charge  than  one  per  centum  per  annum  above  the  prevail- 
ing rates  for  eligible  commercial  paper  of  corresponding 
mat  urity. 


1  This  section  in  effect  amends  sections  13  and  16,  Federal  Reserve  Act. 


APPENDIX.  71 

Any  Federal  reserve  bank  may,  with  the  approval  of 
the  Federal  Reserve  Board,  use  any  obligation  or  paper  so 
acquired  for  any  purpose  for  which  it  is  authorized  to 
use  obligations  or  paper  secured  by  bonds  or  notes  of  the 
United  States  not  bearing  the  circulation  privilege:  Pro- 
vided, hoivever,  That  whenever  Federal  reserve  notes  are 
issued  against  the  security  of  such  obligations  or  paper 
the  Federal  ^Reserve  Board  may  make  a  special  interest 
charge  on  such  notes,  which,  m  the  discretion  of  the  Fed- 
eral Reserve  Board,  need  not  be  applicable  to  other 
Federal  reserve  notes  which  may  from  time  to  time  be 
issued  and  outstanding.  All  provisions  of  law,  not  in- 
consistent herewith,  in  respect  to  the  acquisition  by  any 
Federal  reserve  bank  of  obligations  or  paper  secured  by 
such  bonds  or  notes  of  the  United  States,  and  in  respect 
to  Federal  reserve  notes  issued  against  the  security  of 
such  obligations  or  paper,  shall  extend,  in  so  far  as 
applicable,  to  the  acquisition  of  obligations  or  paper 
secured  by  the  bonds  of  the  Corporation  and  to  the  Fed- 
eral reserve  notes  issued  against  the  security  of  such 
obligations  or  paper. 

DEPOSIT  OF  FUNDS  OF  WAR  FINANCE  CORPORATION 
IN  MEMBER  BANKS  OR  FEDERAL  RESERVE  BANKS- 
FEDERAL  RESERVE  BANKS  AS  DEPOSITARIES  AND 
FISCAL  AGENTS  OF  WAR  FINANCE  CORPORATION, 

Section  15  of  War  Finance  Corporation  Act,  approved 
April  5,  1918,  as  amended  by  Victory  liberty  Loan  Act 
approved  March  3,  1919. * 

Sec  15.  That  all  net  earnings  of  the  Corporation  not 
required  for  its  operations  shall  be  accumulated  as  a 
reserve  fund  until  such  time  as  the  Corporation  liquidates 
under  the  terms  of  this  title.  Such  reserve  fund  shall, 
upon  the  direction  of  the  board  of  directors,  with  the 
approval  of  the  Secretary  of  the  Treasury,  be  invested  in 
bonds  and  obligations  of  the  United  States,  issued  or 
converted  after  September  24,  1917,  or  upon  like  direction 
and  approval  may  be  deposited  in  member  banks  of  the 
Federal  Reserve  System,  or  in  any  of  the  Federal  reserve 
banks,  or  be  used  from  time  to  time,  as  well  as  any  other 
funds  of  the  Corporation,  in  the  purchase  or  redemption 
of  any  bonds  issued  by  the  Corporation.  The  Federal 
reserve  banks  are  hereby  authorized  to  act  as  depositaries 
for  and  as  fiscal  agents  of  the  Corporation  in  the  general 

»  This  section  in  effect  amends  sections  13  and  1G  of  the  Federal  Reserve  Ait, 


72  APPENDIX. 

performance  of  the  powers  conferred  by  this  title.  Begin- 
ning twelve  months  after  the  termination  of  the  war,  the 
date  of  such  termination  to  be  fixed  by  a  proclamation  of 
the  President  of  the  United  States,  the  directors  of  the 
Corporation  shall  proceed  to  liquidate  its  assets  and  to 
wind  up  its  affairs,  but  the  directors  of  the  Corporation, 
in  their  discretion,  may,  from  time  to  time,  prior  to  such 
date,  sell  and  dispose  of  any  securities  or  other  property 
acquired  by  the  Corporation.  Any  balance  remaining 
after  the  payment  of  all  its  debts  shall  be  paid  into  the 
Treasury  of  the  United  States  as  miscellaneous  receipts, 
and  thereupon  the  Corporation  shall  be  dissolved. 

MELTING  OF  SILVER  DOLLARS— ISSUE  OF  $1  AND  $2 
FEDERAL  RESERVE  BANK  NOTES. 

The  Pittman  Act,  approved  April  23,  1918. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled, 
That  the  Secretary  of  the  Treasury  is  hereby  authorized 
from  time  to  time  to  melt  or  break  up  and  to  sell  as  bullion 
not  in  excess  of  three  hundred  and  fifty  million  standard 
silver  dollars  now  or  hereafter  held  in  the  Treasury  of 
the  United  States.  Any  silver  certificates  which  may  be 
outstanding  against  such  standard  silver  dollars  so  melted 
or  broken  up  shall  be  retired  at  the  rate  of  $1  face 
amount  of  such  certificate  for  each  standard  silver  dollar 
so  melted  or  broken  up.  Sales  of  such  bullion  shall  be 
made  at  such  prices  not  less  than  $1  per  ounce  of  silver 
one  thousand  fine  and  upon  such  terms  as  shall  be 
established  from  time  to  time  by  the  Secretary  of  the 
Treasury. 

Sec.  2.  That  upon  every  such  sale  of  bullion  from 
time  to  time  the  Secretary  of  the  Treasury  shall  imme- 
diately direct  the  Director  of  the  Mint  to  purchase  in  the 
United  States,  of  the  product  of  mines  situated  in  the 
United  States  and  of  reduction  works  so  located,  an 
amount  of  silver  equal  to  three  hundred  and  seventy- 
one  and  twenty-five  hundredths  grains  of  pure  silver  in 
respect  of  every  standard  silver  dollar  so  melted  or  broken 
up  and  sold  as  bullion.     Such  purchases  shall  be  made  in 

i  This  act  iii  effect  amends  sections  4  ami  16  of  the  Federal  Reserve  Act. 


APPKXDIX.  73 

accordance  with  the  then  existing  regulations  of  the 
Mint  and  at  the  fixed  price  of  $1  per  ounce  of  silver 
thousand  fine,  delivered  at  the  option  of  the  Director  of 
the  Mint  at  New  York,  Philadelphia,  Denver,  or  San 
Francisco.  Such  silver  so  purchased  may  be  resold  for 
any  of  the  purposes  here  i  pecified  in  section    : 

of  this  Act,  under  rules  and  regulations  to  be  established 
by  the  Secretary  of  the  Treasury,    and   an;  of 

such  silver  so  purchased  over  and  above  the  require- 
ments for  such  purposes,  shall  be  coined  into  standard 
silver  dollars  or  held  for  the  purpose  of  such  coin. 
and  silver  certificates  shall  be  issued  to  the  amount  of 
such  coinage.  The  net  amount  of  silver  so  purchased, 
after  making  allowance  for  all  resales,  shall  not  exceed 
at  any  one  time  the  amount  needed  to  coin  an  aggregate- 
number  of  standard  silver  dollars  equal  to  the  aggregate 
number  of  standard  silver  dollars  theretofore  melted  or 
broken  up  and  sold  as  bullion  under  the  provisions  of 
this  Act,  but  such  purchases  of  silver  shall  continue  until  ' 
the  net  amount  of  silver  so  purchased,  after  making 
allowance  for  all  resales,  shall  be  sufficient  to  coin  there- 
from an  aggregate  number  of  standard  silver  dollars 
equal  to  the  aggregate  number  of  standard  silver  dollars 
theretofore  so  melted  or  broken  up  and  sold  as  bullion. 

Sec.  3.  That  sales  of  silver  bullion  under  authority  of 
this  Act  may  be  made  for  the  purpose  of  conserving  the 
existing  stock  of  gold  in  the  United  States,  of  facilitating 
the  settlement  in  silver  of  trade  balances  adverse  to  the 
United  States,  of  providing  silver  for  subsidiary  coinage 
and  for  commercial  use,  and  of  assisting  foreign  govern- 
ments at  war  with  the  enemies  of  the  United  States. 
The  allocation  of  any  silver  to  the  Director  of  the  Mint 
for  subsidiary  coinage  shall,  for  the  purposes  of  this  Act, 
be  regarded  as  a  sale  or  resale. 

Sec.  4.  That  the  Secretary  of  the  Treasury  is  author- 
ized, from  any  moneys  in  the  Treasury  not  otherwise 
appropriated,  to  reimburse  the  Treasurer  of  the  United 
s  for  the  difference  between  the  nominal  or  face 
value  of  all  standard  silver  dollars  so  melted  or  broken 
up  and  the  value  of  the  silver  bullion,  at  $1  per  ounce 
of  silver  one  thousand  fine,  resulting  from  the  melting 
or  breaking  up  of  such  standard  silver  dollars. 

Sec.  5.  That  in  order  to  prevent  contraction  of  the 
currency,  the  Federal  reserve  banks  may  be  either  per- 
mitted or  required  by  the   Federal    Reserve  Board,   at 


74  APPENDIX. 

the  request  of  the  Secretary  of  the  Treasury,  to  issue 
Federal  reserve  bank  notes,  in  any  denominations 
(including  denominations  of  $1  and  $2)  authorized  by 
the  Federal  Reserve  Board,  in  an  aggregate  amount  not 
exceeding  the  amount  of  standard  silver  dollars  melted 
or  broken  up  and  sold  as  bullion  under  authority  of  this 
Act,  upon  deposit  as  provided  by  law  with  the  Treasurer 
of  the  United  States  as  security  therefor,  of  United  States 
certificates  of  indebtedness,  or  of  United  States  one-year 
gold  notes.  The  Secretary  of  the  Treasury  may,  at  his 
option,  extend  the  time  of  payment  of  any  maturing 
United  States  certificates  of  indebtedness  deposited  as 
security  for  such  Federal  reserve  bank  notes  for  any 
period  not  exceeding  one  year  at  any  one  extension  and 
may,  at  his  option,  pay  such  certificates  of  indebtedness 
prior  to  maturity,  whether  or  not  so  extended.  The 
deposit  of  United  States  certificates  of  indebtedness  by 
Federal  reserve  banks  as  security  for  Federal  reserve 
bank  notes  under  authority  of  this  Act  shall  be  deemed 
to  constitute  an  agreement  on  the  part  of  the  Federal 
reserve  bank  making  such  deposit  that  the  Secretary  of 
the  Treasury  may  so  extend  the  time  of  payment  of  such 
certificates  of  indebtedness  beyond  the  original  maturity 
date  or  beyond  any  maturity  date  to  which  such  certifi- 
cates of  indebtedness  may  have  been  extended,  and  that 
the  Secretary  of  the  Treasury  may  pay  such  certificates 
in  advance  of  maturity,  whether  or  not  so  extended. 

Sec.  6.  That  as  and  when  standard  silver  dollars  shall 
be  coined  out  of  bullion  purchased  under  authority  of 
this  Act,  the  Federal  reserve  banks  shall  be  required  by 
the  Federal  Reserve  Board  to  retire  Federal  reserve  bank 
notes  issued  under  authority  of  section  five  of  this  Act, 
if  then  outstanding,  in  an  amount  equal  to  the  amount  of 
standard  silver  dollars  so  coined,  and  the  Secretary  of 
Treasury  shall  pay  off  and  cancel  any  United  States 
ificates  of  indebtedness  deposited  as  security  for 
Federal  reserve  bank  notes  so  retired. 

Sec.  7.  That  the  tax  on  any  Federal  reserve  bank 
notes  issued  under  authority  of  this  Act,  secured  by  the 
deposit  of  United  States  certificates  of  indebtedness  or 
United  States  one-year  gold  notes,  shall  be  so  adjusted 
that  the  net  return  on  such  certificates  of  indebtedness, 
or  such  one-year  gold  notes,  calculated  on  the  face  value 
thereof,  shall  be  equal  to  the  net  return  on  United  States 
two  per  cent  bonds,  used  to  secure  Federal  reserve  bank 


APPENDIX.  75 

notes,  after  deducting  the  amount  of  the  tax  upon  such 
Federal  reserve  bank  notes  so  secured. 

Sec.  8.  That  except  as  herein  provided,  Federal  reserve 
bank  notes  issued  under  authority  of  this  Act,  shall  be 
subject  to  all  existing  provisions  of  law  relating  to  Federal 
reserve  bank  notes. 

Sec.  9.  That  the  provisions  of  Title  VII  of  an  Act 
approved  June  fifteenth,  nineteen  hundred  and  seven- 
teen, entitled  "An  Act  to  punish  acts  of  interference  with 
the  foreign  relations,  the  neutrality,  and  the  foreign 
commerce  of  the  United  States,  to  punish  espionage,  and 
better  to  enforce  the  criminal  laws  of  the  United  States, 
and  for  other  purposes,"  and  the  powers  conferred  upon 
the  President  by  subsection  (b)  of  section  five  of  an  Act 
approved  October  sixth,  nineteen  hundred  and  seven- 
teen, known  as  the  " Trading  with  the  Enemy  Act," 
shall,  in  so  far  as  applicable  to  the  exportation  from  or 
shipment  from  or  taking  out  of  the  United  States  of 
silver  coin  or  silver  bullion,  continue  until  the  net  amount 
of  silver  required  by  section  two  of  this  Act  shall  have 
been  purchased  as  therein  provided. 

Approved,  April  23,  1918, 

RESTRICTIONS    ON    TRANSACTIONS    IN    FOREIGN 
EXCHANGE. 

Section  5  (b)  of  the  Trading  with  the  Enemy  Act,  approved  October 
6,  1917,  as  amended  by  the  Act  approved  September  24,  1918. 

Sec.  5.  That  subdivision  (b)  of  section  5  of  the  Trading 
with  the  Enemy  Act  be,  and  hereby  is,  amended  to  read 
as  follows : 

"(b)  That  the  President  may  investigate,  regulate,  or 
prohibit,  under  such  rules  and  regulations  as  he  may 
prescribe,  by  means  of  licenses  or  otherwise,  any  transac- 
tions in  foreign  exchange  and  the  export,  hoarding,  melt- 
ing, or  earmarkings  of  gold  or  silver  coin  or  bullion  or  cur- 
rency, transfers  of  credit  in  any  form  (other  than  credits 
relating  solely  to  transactions  to  be  executed  wholly 
within  the  United  States),  and  transfers  of  evidences  of 
indebtedness  or  of  the  ownership  of  property  between  the 
United  States  and  any  foreign  country,  whether  enemy, 
ally  of  enemy,  or  otherwise,  or  between  residents  of  one 
or  more  foreign  countries,  by  any  person  within  the 
United  States;  and,  for  the  purpose  of  strengthening, 
sustaining,  and  broadening  the  market  for  bonds  and  cer- 
tificates of  indebtedness  of  the  United  States,  of  prevent- 
ing frauds  upon  the  holders  thereof,  and  of  protecting 


76 


APPENDIX. 

such  holders,  he  may  investigate  and  regulate,  by  means 
of  lieenses  or  otherwise  (until  the  expiration  of  two  years 
after  the  date  of  the  termination  of  the  present  war  with 
the  Imperial  German  Government,  as  fixed  by  his  procla- 
mation), any  transactions  in  such  bonds  or  certificates 
by  or  between  any  person  or  persons:  Provided,  That 
nothing  contained  in  this  subdivision  (b)  shall  be  con- 
strued to  confer  any  power  to  prohibit  the  purchase  or 
sale  for  cash,  or  for  notes  eligible  for  discount  at  any 
Federal  Reserve  Bank,  of  bonds  or  certificates  of  indebted- 
ness of  the  United  States;  and  he  may  require  any  person 
engaged  in  any  transaction  referred  to  in  this  subdivision 
•to  furnish,  under  oath,  complete  information  relative 
thereto,  including  the  production  of  any  books  of  account 
contracts,  letters  or  other  papers,  in  connection  therewith 
in  the  custody  or  control  of  such  person  either  before  or 
after  such  transaction  is  completed." 

Section  5172,  Revised  Statutes,  as  amended  by  the  Act 
approved  March  3,  1919,  amending  the  Federal  Reserve 
Act.1 

Sec.  5172.  That  in  order  to  furnish  suitable  notes  for 
circulation,  the  Comptroller  of  the  Currency  shall,  under 
the  direction  of  the  Secretary  of  the  Treasury,  cause 
plates  and  dies  to  be  engraved,  in  the  best  manner  to 
guard  against  counterfeiting  and  fraudulent  alterations, 
and  shall  have  printed  therefrom  and  numbered  such 
quantity  of  circulating  notes  in  blank,  or  bearing  en- 
graved signatures  of  officers  as  herein  provided,  of  the 
denominations  of  $1,  $2,  $5,  $10,  $20,  $50,  $100,  $500, 
and  $1,000,  as  may  be  required  to  supply  the  associations 
entitled  to  receive  the  same.  Such  notes  shall  express 
upon  their  face  that  they  are  secured  by  United  States 
bonds  deposited  with  the  Treasurer  of  the  United  States, 
by  the  written  or  engraved  signatures  of  the  Treasurer 
and  Register,  and  by  the  imprint  of  the  seal  of  the 
Treasury;  and  shall  also  express  upon  their  face  the 
promise  of  the  association  receiving  the  same  to  pay  on 
demand,  attested  by  the  written  or  engraved  signatures 
of  the  president  or  vice  president  and  cashier;  and  shall 
bear  such  devices  and  such  other  statements  and  shall  be 
in  such  form  as  the  Secretary  of  the  Treasury  shall,  by 
regulation,  direct. 

i  This  act  in  effect  amends  section  27  of  the  Federal  Reserve  Act.    See  ante,  p.  61. 


app]  77 

Section  5200,  Revised  Statutes,  as  amended  by  the  Act 
of  September  24,  1918,  and  the  Act  of  October  22,  1919. 

Sec.  5200.  The  total  liabilities  to  any  association  of 
any  person  or  of  any  company,  corporation,  or  firm  for 
money  borrowed,  including  in  the  liabilities  of  a  company 
or  firm  the  liabilities  of  the  several  members  ther 
shall  at  no  time  exceed  10  per  centum  of  the  amount  of 
the  capital  stock  of  such  association,  actually  paid  in  and 
unimpaired,  and  10  per  centum  of  its  unimpaired  surplus 
fund:  Provided,  ;■  That  (1)  the  discount  of  bills  of 

exchange  drawn  in  good  faith  against  actually  existing 
values,  including  drafts  and  bills  of  exchange  secured  by 
shipping  documents  conveying  or  securing  title  to  goods 
shipped,  and  including  demand  obligations  when  secured 
by  documents  covering  commodities  in  actual  process  of 
shipment,  and  also  including  bankers'  acceptances  of  the 
kinds  described  in  section  13  of  the  Federal  Reserve  Act, 
(2)  the  discount  of  commercial  or  business  paper  actually 
owned  by  the  person,  company,  corporation,  or  firm  ne- 
gotiating the  same,  (3)  the  discount  of  notes  secured  by 
shipping  documents,  warehouse  receipts,  or  other  such 
documents  conveying  or  securing  title  covering  readily 
marketable  nonperishable  staples,  including  live  stock, 
when  the  actual  market  value  of  the  property  securing 
the  obligation  is  not  at  any  time  less  than  115  per  centum 
of  the  face  amount  of  the  notes  secured  by  such  docu- 
ments and  when  such  propertj'  is  fully  covered  by  insur- 
ance, and  (4)  the  discount  of  any  note  or  notes  secured  by 
not  less  than  a  like  face  amount  of  bonds  or  notes  of  the 
United  States  issued  since  April  24,  1917,  or  certificates 
of  indebtedness  of  the  United  States,  shall  not  be  con- 
sidered as  money  borrowed  within  the  meaning  of  this 
section.  The  total  liabilities  to  any  association,  of  any 
person  or  of  any  corporation,  or  firm,  or  company,  or  the 
several  members  thereof  upon  any  note  or  notes  pur- 
chased or  discounted  by  such  association  and  secured  by 
bonds,  notes,  or  certificates  of  indebtedness  as  described 
in  (4)  hereof  shall  not  exceed  (except  to  the  extent  per- 
mitted by  rules  and  regulations  prescribed  by  the  Comp- 
troller of  the  Currency,  with  the  approval  of  the  Secre- 
tary of  the  Treasury)  10  per  centum  of  such  capital  stock 
and  surplus  fund  of  such  association  and  the  total  liabil- 
ities to  any  association  of  any  person  or  of  any  corpora- 
tion, or  firm,  or  company,  or  the  several  members  thereof 


78  APPENDIX. 

for  money  borrowed,  including  the  liabilities  upon  notes 
secured  in  the  manner  described  under  (3)  hereof,  event 
transactions  (1),  (2),  and  (4),  shall  not  at  any  time  ex- 
ceed 25  per  centum  of  the  amount  of  the  association's 
paid-in  and  unimpaired  capital  stock  and  surplus.  The 
exception  made  under  (3)  hereof  shall  not  apply  to  the 
notes  of  any  one  person,  corporation  or  firm  or  company, 
or  the  several  members  thereof  for  more  than  six  months 
in  any  consecutive  twelve  months. 

SECTION  5202,  REVISED  STATUTES,  AS  AMENDED  BY 
WAR  FINANCE  CORPORATION  ACT  AND  THE  ACT  OF 
OCTOBER  22,  1919. 

Sec.  5202.  No  national  banking  association  shall  at 
any  time  be  indebted,  or  in  any  way  liable,  to  an  amount 
exceeding  the  amount  of  its  capital  stock  at  such  time 
actually  paid  in  and  remaining  undiminished  by  losses 
or  otherwise,  except  on  account  of  demands  of  the  nature 
following : 

First.  Notes  of  circulation. 

Second.  Moneys  deposited  with  or  collected  by  the 
association. 

Third.  Bills  of  exchange  or  drafts  drawn  against 
money  actually  on  deposit  to  the  credit  of  the  association, 
or  due  thereto. 

Fourth.  Liabilities  to  the  stockholders  of  the  associa- 
tion for  dividends  and  reserve  profits. 

Fifth.  Liabilities  incurred  under  the  provisions  of 
the  Federal  Reserve  Act. 

Sixth.  Liabilities  incurred  under  the  provisions  of  the 
War  Finance  Corporation  Act. 

Seventh.  Liabilities  created  by  the  indorsement  of 
accepted  bills  of  exchange  payable  abroad  actually 
owned  by  t Lie  indorsing  bank  and  discounted  at  home 
or  abroad. 

Sections  5208  and  5209,  Revised  Statutes,  as  amended  by 
the  Act  of  September  26,   1918. 

Sec.  5208.  It  shall  be  unlawful  for  any  officer,  director, 
agent,  or  employee  of  any  Federal  rexer\  e  bank,  or  of  any 
member  bank  as  defined  in  the  .Vet  of  December  twenty- 
third,  nineteen  hundred  and  thirteen,  known  as  the 
Federal  Act,   to  certify  any  check  drawn  upon 

such  Federal  reserve  bank  or  member  bank;  unless  the 
person,  firm,  or  corporation  drawing  the  check  has  oh 
deposit  with  such  Federal  reserve  bank  or  member  bank, 


APPENDIX.  79 

at  the  times  such  check  is  certified,  an  amount  of  money 
not  less  than  the  amount  specified  in  such  check.  Any 
check  so  certified  by  a  duly  authorized  officer,  director, 
agent,  or  employee  shall  be  a  good  and  valid  obligation 
against  such  Federal  reserve  bank  or  member  bunk ;  but 
the  act  of  any  officer,  director,  agent,  or  employee  of  any 
such  Federal  reserve  bank  or  member  bank  in  violation 
of  this  section  shall,  in  the  discretion  of  the  Federal  Re- 
serve Board,  subject  such  Federal  reserve  bank  to  the 
penalties  imposed  by  section  eleven,  subsection  (h),  of 
the  Federal  reserve  Act,  and  shall  subject  such  member 
bank  if  a  national  bank  to  the  liabilities  and  proceedings 
on  the  part  of  the  Comptroller  of  the  Currency  provided 
for  in  section  fiftj^-two  hundred  and  thirth-four,  Revised 
Statutes,  and  shall,  in  the  discretion  of  the  Federal  Re- 
serve Board,  subject  any  other  member  bank  to  the 
penalties  imposed  by  section  nine  of  said  Federal  reserve 
Act  for  the  violation  of  any  of  the  provisions  of  said  Act. 
Any  officer,  director,  agent,  or  emplo3Tee  of  any  Federal 
reserve  bank  or  member  bank  who  shall  willfully  violate 
the  provisions  of  this  section,  or  who  shall  resort  to  any 
device,  or  receive  any  fictitious  obligation,  directly  or 
collaterally,  in  order  to  evade  the  provisions  thereof,  or 
who  shall  certify  a  check  before  the  amount  thereof 
shall  have  been  regularly  entered  to  the  credit  of  the 
drawer  upon  the  books  of  the  bank,  shall  be  deemed 
guilty  of  a  misdemeanor  and  shall,  on  conviction  thereof 
in  any  district  court  of  the  United  States,  be  fined  not 
more  than  $5,000,  or  shall  be  imprisoned  for  not  more 
than  five  years,  or  both,  in  the  discretion  of  the  court. 

Sec.  5209.  Any  officer,  director,  agent,  or  employee  of 
any  Federal  reserve  bank,  or  of  any  member  bank  as 
defined  in  the  Act  of  December  twenty-third,  nineteen 
hundred  and  thirteen,  known  as  the  Federal  reserve  Act, 
who  embezzles,  abstracts,  or  willfully  misapplies  any  of 
the  moneys,  funds,  or  credits  of  such  Federal  reserve 
bank  or  member  bank,  or  who,  without  authority  from 
the  directors  of  such  Federal  reserve  bank  or  member 
bank,  issues  or  puts  in  circulation  any  of  the  notes  of 
such  Federal  reserve  bank  or  member  bank,  or  who, 
without  such  authority,  issues  or  puts  forth  any  certifi- 
cate of  deposit,  draws  any  order  or  bill  of  exchange, 
makes  any  acceptance,  assigns  any  note,  bond,  draft, 
bill  of  exchange,  mortgage,  judgment,  or  decree,  or  who 
makes  any  false  entry  in  any  book,  report,  or  statement 


80  APPENDIX. 

of  such  Federal  reserve  bank  or  member  bank,  with 
intent  in  any  case  to  injure  or  defraud  such  Federal  re- 
serve bank  or  member  bank,  or  an}T  other  company, 
body  politic  or  corporate,  or  any  individual  person,  or 
to  deceive  any  officer  of  such  Federal  reserve  bank  or 
member  bank,  or  the  Comptroller  of  the  Currency,  or 
any  agent  or  examiner  appointed  to  examine  the  affairs 
of  such  Federal  reserve  bank  or  member  bank,  or  the 
Federal  Reserve  Board;  and  every  receiver  of  a  national 
banking  association  who,  with  like  intent  to  defraud  or 
injure,  embezzles,  abstracts,  purloins,  or  willfully  mis- 
applies any  of  the  moneys,  funds,  or  assets  of  his  trust, 
and  every  person  who,  with  like  intent,  aids  or  abets, 
any  officer,  director,  agent,  employee,  or  receiver  in  any 
violation  of  this  section  shall  be  deemed  guilty  of  a  misde- 
meanor, and  upon  conviction  thereof  in  any  district  court 
of  the  United  States  shall  be  fined  not  more  than  $5,000 
or  shall  be  imprisoned  for  not  more  than  five  years,  or 
both,  in  the  discretion  of  the  court. 

Any  Federal  reserve  agent,  or  any  agent  or  employee 
of  such  Federal  reserve  agent,  or  of  the  Federal  Reserve 
Board,  who  embezzles,  abstracts,  or  willfully  misapplies 
any  moneys,  funds,  or  securities  intrusted  to  his  care,  or 
without  complying  with  or  in  violation  of  the  provisions 
of  the  Federal  reserve  Act,  issues  or  puts  in  circulation 
any  Federal  reserve  notes  shall  be  guilty  of  a  misde- 
meanor and  upon  conviction  in  any  district  court  of  the 
United  States  shall  be  fined  not  more  than  $5,000  or  im- 
prisoned for  not  more  than  five  years,  or  both,  in  the 
discretion  of  the  court. 

WAR   STAMP  TAXES— CHECKS,  DRAFTS,  AND  PROMIS- 
SORY NOTES. 

Sections  1100,  1101,  and  1102  of  Revenue  Act  of  1918, 
approved  February  24,  1919. 

TITLE  XI.— STAMP  TAXES. 

Sec.  1100.  That  on  and  after  April  1,  1919,  there  shall 
be  levied,  collected,  and  paid,  for  and  in  respect  of  the 
several  bonds,  debentures,  or  certificates  of  stock  and  of 
indebtedness,  and  other  documents,  instruments,  mat- 
ters, and  things  mentioned  and  described  in  Schedule  A 
of. this  title,  or  for  or  in  respect  of  the  vellum,  parchment, 
or  paper  upon  which  such  instruments,  matters,  or  things, 
or  any  of  them,  are  written  or  printed,  by  any  person 


APPENDIX.  81 

who  makes,  signs,  issues,  sells,  removes,  consigns,  or 
ships  the  same,  or  for  whose  use  or  benefit  II  are 

made,  signed,  issued,  sold,  removed,  consigned,  or  ship- 
ped, the  several  taxes  specified  in  such  schedule.  The 
taxes  imposed  by  this  section  shall,  in  the  case  of  any 
article  upon  which  a  corresponding  stamp  tax  is  now 
imposed  by  law,  be  in  lieu  of  such  tax. 

Sec.  1101.  That  there  shall  not  be  taxed  under  this 
title  any  bond,  note,  or  other  instrument,  issued  by  the 
United  States,  or  by  any  foreign  Government,  or  by  any 
State,  Territory,  or  the  District  of  Columbia,  or  local 
subdivision  thereof,  or  municipal  or  other  corporation 
exercising  the  taxing  power;  or  any  bond  of  indemnity 
required  to  be  filed  by  any  person  to  secure  payment  of 
any  pension,  allowance,  allotment,  relief,  or  insurance  by 
the  United  States;  or  stocks  and  bonds  issued  by  co- 
operative building  and  loan  associations  which  are  or- 
ganized and  operated  exclusively  for  the  benefit  of  their 
members  and  make  loans  only  to  their  shareholders,  or  by 
mutual  ditch  or  irrigating  companies. 

Sec.  1102.  That  whoever— 

(a)  Makes,  signs,  issues,  or  accepts,  or  causes  to  be 
made,  signed,  issued,  or  accepted,  any  instrument, 
document,  or  paper  of  any  kind  or  description  whatso- 
ever without  the  full  amount  of  tax  thereon  being  duly 
paid ; 

(b)  Consigns  or  ships,  or  causes  to  be  consigned  or 
shipped,  by  parcel  post  any  parcel,  package,  or  article 
without  the  full  amount  of  tax  being  duly  paid; 

(c)  Manufactures  or  imports  and  sells,  or  offers  for 
sale,  or  causes  to  be  manufactured  or  imported  and  sold, 
or  offered  for  sale,  any  pla}Ting  cards,  package,  or  other 
article  without  the  full  amount  of  tax  being  duly  paid : 

(d)  Makes  use  of  any  adhesive  stamp  to  denote  any 
tax  imposed  by  this  title  without  canceling  or  obliterat- 
ing such  stamp  as  prescribed  in  section  1104; 

Is  guilty  of  a  misdemeanor  and  upon  conviction  1  hereof 
shall  pay  a  fine  of  not  more  than  $100  for  each  offense. 

Schedule  A. — Stamp  Taxes. 

6.  Drafts  or  checks  (payable  otherwise  than  at  sight 

or  on  demand)  upon,  their  acceptance  or  delivery  within 

the  United  States  whichever  is  prior,  promissory  notes, 

except  bank  notes  issued  for  circulation,  and  for  each 

8881°— 20 6 


82  APPENDIX. 

renewal  of  the  same,  for  a  sum  not  exceeding  SI 00,  2 
cents;  and  for  each  additional  $100,  or  fractional  part 
thereof,  2  cents. 

This  subdivision  shall  not  apply  to  a  promissory  note 
secured  by  the  pledge  of  bonds  or  obligations  of  the 
United  States  issued  after  April  24,  1917,  or  secured  by 
the  pledge  of  a  promissory  note  which  itself  is  secured 
by  the  pledge  of  such  bonds  or  obligations:  Provided, 
That  in  either  case  the  par  value  of  such  bonds  or  obliga- 
tions shall  be  not  Less  than  the  amount  of  such  note. 

STJBTREASTTRIES  ABOLISHED— TRANSFER  OF  CERTAIN 
FUNCTIONS  TO  FEDERAL  RESERVE  BANKS. 

Appropriation  Act,  approved  May  29,  1920. 

Section  3595  of  the  Revised  Statutes  of  the  United 
States,  as  amended,  providing  for  the  appointment  of  an 
Assistant  Treasurer  of  the  United  States  at  Boston,  New 
York,  Philadelphia,  Baltimore,  New  Orleans,  Saint 
Louis,  San  Francisco,  Cincinnati,  and  Chicago,  and  all 
laws  or  parts  of  laws  so  far  as  they  authorize  the  establish- 
ment or  maintenance  of  offices  of  such  Assistant  Treas- 
urers or  of  Subtreasuries  of  the  United  States  are  hereby 
repealed  from  and  after  July  1,  1921 ;  and  the  Secretary  of 
the  Treasury  is  authorized  and  directed  to  discontinue 
from  and  after  such  date  or  at  such  earlier  date  or  dates 
as  he  may  deem  advisable,  such  subtreasuries  and  the 
exercise  of  all  duties  and  functions  by  such  assistant 
treasurers  or  then  offices.  The  office  of  each  assistant 
treasurer  specified  above  and  the  services  of  any  officers 
or  other  employees  assigned  to  duty  at  his  office  shall 
terminate  upon  the  discontinuance  of  the  functions  of 
that  office  by  the  Secretary  of  the  Treasury. 

The  Secretary  of  the  Treasury  is  hereby  authorized, 
in  his  discretion,  to  transfer  any  or  all  of  the  duties  and 
functions  performed  or  authorized  to  be  performed  by 
the  assistant  treasurers  above  enumerated,  or  their 
offices,  to  the  Treasurer  of  the  United  States  or  the  mints 
or  assay  offices  of  the  United  States,  under  such  rules 
and  regulations  as  he  may  prescribe,  or  to  utilize  any  of 
the  Federal  reserve  banks  acting  as  depositaries  or  fiscal 
agents  of  the  United  States,  for  the  purpose  of  perform- 
ing any  or  all  of  such  duties  and  functions,  notwithstand- 
ing the  limitations  of  section  15  of  the  Federal  reserve 
Act.  as  amended,  or  any  other  provisions  of  law:  Provided, 
That  if  any  moneys  or  bullion,  constituting  part  of  the 


APPENDIX.  83 

trust  funds  or  other  special  funds  heretofore  required  by 
lav.'  to  be  kept  in  Treasury  offices,  shall  be  deposited  with 
any  Federal  reserve  hank,  then  such  moneys  or  bullion 
shall  by  such  hank  be  kept  separate  and  distinct  from  the 
assets,  funds,  and  securities  of  the  Federal  reserve  hank 
and  he  held  in  the  joint  custody  of  the  Federal  reserve 
agent  and  the  Federal  reserve  hank :  Provided furtln  r,  Thai 
nothing  in  this  section  shall  be  construed  to  deny  the 
right  of  the  Secretary  of  the  Treasury  to  use  member 
banks  as  depositaries  as  heretofore  authorized  by  law. 

The  Secretary  of  the  Treasury  is  hereby  authorized  to 
assign  any  or  all  the  rooms,  vaults,  equipment,  and  safes 
or  space  in  the  buildings  used  by  the  sub  treasuries  to  any 
Federal  reserve  hank  acting  as  fiscal  agent  of  the  United 
Stat'  - 

ADVICE     AND     ASSISTANCE     OF     FEDERAL    RESERVE 
BOARD  WITH  RESPECT  TO  LOANS   TO  RAILROADS. 

Section  210  of  the  Transportation  Act  of  1920,  approved 
February  28,    1920. 

Sec.  210.  (a)  For  the  purpose  of  enabling  carriers  by 
railroad  subject  to  the  Interstate  Commerce  Act  properly 
to  serve  the  public  during  the  transition  period  imme- 
diately following  the  termination  of  Federal  control,  any 
such  carrier  may,  at  any  time  after  the  passage  of  this 
Act  and  before  the  expiration  of  two  years  after  the 
termination  of  Federal  control,  make  application  to  the 
Commission  for  a  loan  from  the  United  States,  setting 
forth  the  amount  of  the  loan  and  the  term  for  which  it  is 
desired,  the  purpose  of  the  loan  and  the  uses  to  which  it 
will  be  applied,  the  present  and  prospective  ability  of  the 
applicant  to  repay  the  loan  and  meet  the  requirements 
of  its  obligations  in  that  regard,  the  character  and  value 
of  the  security  offered,  and  the  extent  to  which  the  public 
convenience  and  necessity  will  be  served.  The  applica- 
tion shall  be  accompanied  by  statements  showing  such 
facts  and  details  as  the  Commission  may  require  with 
respect  to  the  physical  situation,  ownership,  capitaliza- 
tion, indebtedness,  contract  obligations,  operation,  and 
earning  power  of  the  applicant,  together  with  such 
other  facts  relating  to  the  propriety  and  expediency  of 
granting  the  loan  applied  for  and  the  ability  of  the 
applicant  to  make  good  the  obligation,  as  the  Commis- 
sion may  deem  pertinent  to  the  inquiry. 

(b)  If  the  Commission,  after  such  hearing  and  investi- 
gation, with  or  without  notice,  as  it  may  direct,  finds 


84  APPENDIX. 

that  the  making,  in  whole  or  in  part,  of  the  proposed 
loan  by  the  United  States  is  necessary  to  enable  the 
applicant  properly  to  meet  the  transportation  needs  of 
the  public,  and  that  the  prospective  earning  power  of  the 
applicant  and  the  character  and  value  of  the  security 
offered  are  such  as  to  furnish  reasonable  assurance  of  the 
applicant's  ability  to  repay  the  loan  within  the  time 
fixed  therefor,  and  to  meet  its  other  obligations  in 
connection  with  such  loan,  the  Commission  may  certify 
to  the  Secretary  of  the  Treasury  its  findings  of  fact  and 
its  recommendations  as  to:  the  amount  of  the  loan  which 
is  to  be  made;  the  time,  not  exceeding  five  years  from 
the  making  thereof,  within  which  it  is  to  be  repaid;  the 
character  of  the  security  which  is  to  be  offered  "therefor; 
and  the  terms  and  conditions  of  the  loan. 

(c)  Upon  receipt  of  such  certificate  from  the  Commis- 
sion, the  Secretary  of  the  Treasury,  at  any  time  before 
the  expiration  of  twenty-six  months  after  the  termina- 
tion of  Federal  control,  is  authorized  to  make  a  loan,  not 
exceeding  the  maximum  amount  recommended  in  such 
certificate,  out  of  any  moneys  in  the  revolving  fund 
provided  for  in  this  section.  All  such  loans  shall  bear 
interest  at  the  rate  of  6  per  centum  per  annum,  payable 
semiannually  to  the  Secretary  of  the  Treasury  and  to  be 
placed  to  the  credit  of  the  revolving  fund  provided  for  in 
this  section.  The  time,  not  exceeding  five  years  from 
the  making  thereof,  within  which  such  loan  is  to  be 
repaid,  the  security  which  is  to  be  taken  therefor,  which 
shall  be  adequate  to  secure  the  loan,  the  terms  and  condi- 
tions of  the  loan,  and  the  form  of  the  obligation  to  be 
entered  into,  shall  be  prescribed  by  the  Secretary  of  the 
Treasury. 

(d)  The  Commission  or  the  Secretary  of  the  Treasury 
may  call  upon  the  Federal  Reserve  Board  for  advice  and 
assistance  with  respect  to  any  such  application  or  loan. 

(e)  There  is  hereby  appropriated  out  of  any  moneys 
in  the  Treasury  not  otherwise  appropriated  the  sum  of 
$300,000,000,  which  shall  be  used  as  a  revolving  fund  for 
the  purpose  of  making  the  loans  provided  for  in  this 
section,  and  for  paying  the  judgments,  decrees,  and 
awards  referred  to  in  subdivision  (e)  of  section  206. 

(f)  A  carrier  may  issue  evidences  of  indebtedness  to 
the  United  States  pursuant  to  this  section  without  the 
authorization  or  approval  of  any  authority,  State  or 
Federal,  and  without  compliance  with  any  requirement, 
State  or  Federal,  as  to  notification. 


INDEX. 


A. 

Acceptance  of  terms  of  Federal  Reserve  Ad  b>  uational  and  Statebanks.  pp.4,  5    e<  .  2 

Acceptances,  i 

Foreign  Banking  ( !orporations p.  53,  sec.  25  (a)  (a) 

Limitations  on  amount  of,  for  any  one  person  b;    member  banks 

in  foreign  and  domestic  transactions p.  '.I*,  sec.  I:; 

Limitations  on  transactions  to  furnish  dollar  exchange p.  30,  sec.  13 

Member  banks  in  foreign  and  domestic  transactions p.  2s.  sec.  L3 

Member  banks  to  furnish  dollar  exchange p.  30,  sec.  13 

Purchase  of,  by  Federal   1 U  •  erve  Banks p.  31,  sec.  14 

Rediscount  of,  by  Federal  Reserve  Banks p.  28,  sec  13 

Acceptances,  trade,  rediscount  of,  by  Federal  Reserve  Banks p.  28,  sec.  13 

Acts  amended,  repealed,  or  otherwise  referred  to  by  Federal  Reserve 
Act: 

Act  of  June  20,  1874 p.  39,  sec.  17 :  p.  4  I .  sec.  20 

Act  of  July  12,  1882. p.  40,  sec.  17 

Act  of  Jan.  16,  1883 p.  25  sec.  11  (1) 

Act  of  Mar.  14,  1900 p.  39,  sec.  16;  p.  61,  sec.  26 

Act  of  Mar.  4,  1907 p.  39,  sec.  16 

Act  of  May  30,  1908 p.  37,  sec.  16;  p.  61 ,  sec  27 

Act  of  Mar.  2,  1911 p.  39,  sec.  16 

Act  of  Oct.  15,  1914 p.  51,  sec.  25 

Act  of  June  12,  1916 p.  39,  sec.  16 

United  States  Revised  Statutes,  sec.  321 p.  21,  sec.  10 

United  States  Revised  Statutes,  sec.  5143 p.  62,  sec.  28 

United  States  Revised  Statutes,  sec.  5153 p.  61,  sec.  27 

United  States  Revised  Statutes,  sec.  5154 p.  15, 'see.  8 

United  States  Revised  Statutes,  sec.  5 1 59 p.  39,  sec.  17 

United  States  Revised  Statutes,  sec.  51 72 p.  61 ,  sec.  27;  p.  76 

United  States  Revised  Statutes,  sec.  5174 p.  37,  sec.  16 

United  States  Revised  Statutes,  sec.  5191 p.  61 ,  sec.  27 

United  States  Revised  Statutes,  sec.  5202 p.  29,  sec.  13;  p.  78 

United  States  Revised  Statutes,  sec.  5209 p.  16,  sec.  9;  p.  78 

United  States  Revised  Statutes,  sec.  5214 p.  61,  sec.  27 

United  States  Revised  Statutes,  sec.  5240 p.  IS.  sec.  9;  p.  44,  sec.  21 

United  States  Statutes  at  Large,  vol.  22.  p.  403 p.  25,  sec.  11  (1) 

Acts  published  in  appendix: 

Act  of  Juno  25,  1910 p.  66 

Act  of  Oct.  15,  1914 p.  64 

Act  of  May  15,  1016 p.  65 

Act  of  May  18,  1916..... p.  66 

Act  of  July  17,  L916 p.  66 

Act  of  Apr.  24,  1017 p.  68 

Act  of  Sent.  24,  Mil 7 ! p.  69 

Act  of  Oct,  6,  1917 '. p.  75 

Act,  of  Apr.  4,  1918 '  p.  69 

85 


86  INDEX. 

Acts  published  in  Appendix — Continued. 

Act  of  Apr.  5,  1918 p.  70 

Act  of  Apr.  23,  1918 p.  72 

Act  of  Sept.  24,  1918 pp.  75,  77 

Act  of  Sept.  26,  1918 p.  78 

Act  of  Feb.  24,  1919 p.  80 

Act  of  Mar.  3.  1919.  amending  Bee.  5172,  Revised  Statutes p.  76 

Act  of  Mar.  3,  1919,  amending  War  Finance  Corporation  Act p.  71 

Act  of  Oct.  22,  1919 pp.  77,  78 

Art  of  Feb.  28,  1920 p.  83 

Act  of  May  26,  1920 p.  65 

Act  of  May  29,  1920 p.  82 

Appropriation  Act  of  1920 p.  82 

Clayton  Antitrust  Act p.  64 

Farm  Loan  Act p.  66 

First  Liberty  Bond  Act p.  68 

Gold  supply,  act  to  conserve -.  p.  72 

Kern  amendment  to  Clayton  Act p.  65 

Pittman  Act p.  72 

Postal  Savings  Act,  amendment  to p.  66 

Revenue  Act  of  1918 p.  80 

Second  Liberty  Bond  Act p.  69 

Third  Liberty  Bond  Act p.  69 

Trading-with-the-enemy  Act p.  75 

Transportation  Act  of  1920 p.  83 

United  States  Revised  Statutes,  sec.  5172 p.  76 

United  States  Revised  Statutes,  sec.  5200 p.  77 

United  States  Revised  Statutes,  sec.  5202 p.  78 

United  States  Revised  Statutes,  sec.  5208 p.  78 

United  States  Revised  Statutes,  sec.  5209 p.  79 

War  Finance  Corporation  Act p.  70 

Actually  existing  values,  restrictions  on  amount  of  paper  discounted 
do  not  apply  to  bills  drawn  against p.  18,  sec.  9;  p.  28,  sec.  13;  p.  77 

Advances  to  member  banks  on  15-day  promissory  notes p.  29,  sec.  13 

Agencies,  establishment  of,  by — 

Federal  Reserve  Banks p.  32,  sec.  14 

Foreign  Banking  Corporations p.  54,  sec.  25 

1  Reserve.     (See  Federal  Reserve  Agents.) 

Agents,  right  of  national  banks  to  act  as,  for  insurance  companies,  and 

in  procuring  loans  on  real  estate p.  30,  sec.  13 

Agricultural  paper,  rediscount  of p.  28,  sec  L3 

Alaska,  national  banks  in,  may  join  system  or  remain  nonmembers. . .  p.  44,  s< 

Amendments,  right  to  amend,  alter,  or  repeal  expressly  reserved p.  63,  sei 

Applications: 

.lcellation  by  State  banks  of  stock  in  Federal  Reserve  Banks.,  p.  17,  sec.  9 

Fslablishment  of  foreign  branches  by  national  banks p.  49,  sec.  25 

Federal  Reserve  notes p.  33,  sec.  16 

Fiduciary  powers  by  national  banks p.  23,  sec.  11  (k) 

Member  banks,  application  for  stock  in  Federal  Reserve  Banks, 

p.  7,  see.  !:  p.  L3,  sec.  5;  p.  16,  sec.  9 

Appropriation  Act  of  1920: 

Federal  Reserve  Banks,  transfer  of  certain  functions  to p.  82 

Sub  treasuries  abolished p.  82 

Assessments.     (See  Federal  Reserve  Banks.) 

Assistants  to  Federal  Reserve  Agents p.  12,  sec.  4 


INDEX.  87 

B. 

Balances: 

Reserve  required  by  member  banks p.  42,  sec.  19 

Clearing  member  banks  with  Federal    Reserve   Banks  to  offset 
items  in  transit p.  27,  sec.  13 

Banks  (sa  also  Federal  Reserve  Banks;  Foreign  Banking  Corporations; 
Nfember  banks;  State  banks;  National  bank 
Alaska  and  other  dependencies,  banks  in  may  remain  nonmember 

banks p.  44,  sec.  19 

Conversion  of,  into  Foreign  Banking  Corporations p.  59,  sec.  25  a ) 

Conversion  of,  into  national  banks p.  15,  sec.  8 

Definition  of  term  "  bank  " p.  3,  sec.  1 

Bankers'  acceptances.     (Se(  Acceptances.) 

Banking  corporations.     (See  Foreign  Banking  Corporations.) 

Banking  corporations,  conversion  of,  into  Foreign  Banking  Corpora- 
tions    p.  59,  sec.  2 

Bank  examiner.     (See  Examiners.) 

Board: 

Definition  of  term  " Board " p.  3,  sec.  1 

Federal  Reserve.     (See  Federal  Reserve  Board.) 

Bonds: 

Circulation  privilege,  Federal  Reserve  Banks  required  to  pur- 
chase bonds  bearing p.  40,  sec.  18 

Deposit  requirements  of  national  banks  repealed p.  39,  sec.  17 

Exchange  of  2  per  cent  for  3  per  cent p.  41,  sec.  18 

Federal  Reserve  Agents p.  23,  sec.  11  (i) 

Federal  Reserve  Banks,  purchase  of,  by,  in  open  market p.  31,  sec.  14  (b) 

Limitation  on  amount  to  be  purchased  by  Federal  Reserve  Banks,     p.  40,  sec.  18 

Notes  taken  out  against  bonds  purchased p.  41,  sec.  18 

Officers  and  employees  of  Federal  Reserve  Banks p.  8,  sec.  4 

Rediscount  of  paper  secured  by,  issued  since  April  24,  1917.  .  .   p.  25,  sec.  11  (m) 

Refunding p.  40,  sec.  18 

Repurchase  of  1-year  bonds  from  year  to  year p.  41,  sec.  18 

Revenue  bonds,  purchase  of,  by  Federal  Reserve  Banks p.  31,  sec.  14 

War-stamp  tax  inapplicable  to  paper  secured  by  United  States 

bonds  issued  since  April  24,  1917 p.  82 

Branches: 

Federal  Reserve  Banks p.  7,  sec.  3 

Foreign  Banking  Corporations p.  54,  sec.  25  (a) 

National  banks p.  49,  sec.  25 

Brokers  procuring  real  estate  loans,  national  banks  as p.  30,  sec.  13 

Business  of  Foreign  Banking  Corporations,  restrictions  on p.  55,  sec.  25  (a) 

C. 

Capital  stock.     (See  Stock.) 
Central  reserve  cities: 

I  llassification  by  Federal  Reserve  Board p.  22,  sec.  11  (e);  p.  49,  sec.  24 

Previous  status  not  changed P-  6,  sec.  2 

Certificates  of  indebtedness,  rediscount  of  paper  secured  by.  .• p.  25,  sec.  11  (m) 

Certification  of  checks  against  insufficient  funds,  illegality  of p.  19,  sec.  9;  p.  78 

Civil  service,  employees  of  Federal  Reserve  Board  not  subject  to. . .   p.  25,  sec.  11  (1) 
Clayton  Act: 

Application  of,  to  directors  of  Foreign  Banking  Corporations;  ex- 
ceptions   P-  56,  sec.  25   a 


58  INDEX. 

Clayton  Act — Continued. 

Application  of,  to  directors  of  member  banks  holding  stock  in  State 

Foreign  Banking  Corp, , rations p.  51,  sec.  25 

Text  of  act p.  64 

Clearing  bouse: 

Federal  Reserve  Bank  to  act  as p.  38,  sec.  16 

Federal  Reserve  Board  may  act  as p.  38,  sec.  16 

Federal  Reserve  Board  to  fix  cbarges p.  38. 

Collections: 

gesfor p.  27,  see.  13;  p. 

Deposits  with  Federal  Reserve  Banks  for p.  26,  sec.  13 

Expenses  of p.  38,  sec.  16 

( lollateral  notes  of  member  banks p.  29,  se 

Commercial  paper,  rediscount  of p.  27.  sec.  13 

Commissions  for  procuring  loans  forbidden p.  46,  sec.  22  (c) 

Comptroller  of  Currency: 

Amendment  to  act  creating  office p.  21,  sec.  10 

Authorizing  Federal  Reserve  Banks  to  commence  business p.  9,  sec.  4 

Ex  officio  member  of  Federal  Reserve  Board p.  19,  sec.  10 

Conversion: 

State  bank  into  national  bank p.  15,  sec.    8 

State  corporations  principally  engaged  in  foreign  business  into 

Foreign  Banking  Corporations p.  59,  sec.  25  (a) 

D. 

Deficienciesinreservesof  Federal  Reserve  Banks,  graduated  tax  upon.  p.  22,  sec.  11  (c) 

Deficiencies  in  reserves  of  member  banks p.  43.  sec.  19 

Definitions: 

Bank p.  3,  sec.  1 

Board p.  3,  sec.  1 

Demand  deposits p.  42,  sec.  19 

District p.  3.  sec.  1 

Member  bank p.  3,  sec.  1 

National  bank p.  3,  sec.  1 

National  banking  association p.  3,  sec.  1 

Reserve  bank p.  3,  sec.  1 

Time  deposits p.  42,  see.  19 

I  demand  deposits,  definition  of p.  42.  sec.  I  9 

Dependencies: 

Foreign  Banking  Corporations  may  carry  on  business  in p.  51 ,  sec.  25  (a) 

National  banks  in,  may  remain  nonmembers p.  44,  sec.  19 

Deposits  (see  also  Government  depofi 

Demand p.  42  sec.  19 

Federal  Reserve  Banks,  deposits  accepted  by p.  26.  sec.  L3 

Postal  savings  funds p.  42,  sec.  1 9;  p.  66 

Proceeds  of  sale  of  bonds  and  certificates  of  indebtedness pp.  68,  69 

Reserve  against.     (See  Resen  e.) 

Time p.  42,  sec.  19 

Deputy  chairman  of  Board,  appointment  and  duties p.  1 1,  sec.  4 

Directors 

Branch  banks  of  Federal  Reserve  Banks p.  7.  sec.  3 

Federal  Reserve  Banks- 
Classification p.  9,  sec.  4 

Class  A  and  Class  B  directors,  metliod  of  election p.  10,  sec.  4 

Class  C  directors,  appointment  of pp.  10,  11,  sec.  4 


INDEX.  89 

Directors— Continued. 

Federal  Reserve  Banks — Continued. 

Duties  in  ,u<  neral p.  9,  sec.  4 

Qualifications  of pp.  9,  LO,  11   sec.  4 

Removal  of 

Salaries,  expenses,  etc.,  ol p.  12.  sec.  4 

Selection  of,  method    '  '  ss  A,  B,  and  C pp.  10, 11,  sec.  4 

Senators  and  Representath  es,  ineligibility  of p.  10,  sec.  ! 

Suspension  of,  by  Fed<  ral  Reserve  Hoard p.  23,  sec.  1 1  (0 

Term  of  office p.  12.  sec.  1 

Vacancies  to  be  filled p.  12,  sec.  4 

Foreign  Banking  Corporations.     (See  Foreign  •  orpora- 

tions;  Direct  • 
Member  banks — 

Connivance  of  directors  of,  with  directors  of  other  member 

banks,  prohibited p.  47',  sec.  22  (f) 

Disclosure  of  profits  in  sales  by  directors  of p.  -(d) 

Fees  or  commission  prohibited p.  46,  .-•■•.  22  (c) 

Foreign  Banking  Corporations,  directors  of  member  banks  may 

serve  as  directors  of p.  51,  Bee.  25 

Interlocking  directorates  prohibited p.  64 

Member  of  Federal  Reserve  Board  ineligible p.  20,  sec.  10 

Penalty  for  accepting  fees  or  commissions t>.  46,  sec.  22  (c) 

Preferential  interest  rate  on  deposits  of  directors  prohibited,   p.  47,  sec.  22  (e) 

Purchases  by  bank  from p.  47,  sec.  22  (d) 

National  banks — 

Personal  liability  of  directors  of,  for  noncompliance  with  the 

act p.  5,  sec.  2 

Interlocking  directorates  prohibited p.  64 

Discounts  (see  also  Rediscounts): 

Exception  to  limitations  on,  as  prescribed  by  sees.  9  and  13...  p.  25,  sec.  11  (m) 
limitations  on  discounts  of  any  one  borrower.  . .  p.  18,  sec.  9;  p.  25,  sec.  11  (m); 

p.  28,  sec.  13 
Member  bank  can  not  act  as  agent  for  nonmember  bank  to  obtain 

discounts p.  43,  sec.  19 

Promissory  notes  of  member  banks  secured  by  paper  eligible  for 

rediscount p.  29;  sec.  13 

Rates  of .     (See  Discount  and  interest  rat 
Discount  and  interest  rates: 

Federal  Ad  via  »ry  <  'ouncil  may  recommend p.  26,  sec.  12 

Federal  Reserve  Bank  may  establish p.  31,  sec.  14 

Federal  Reserve  Board  may  review  and  determine.,  p.  29,  sec.  I  ►;  p.  31,  sec.  1  I 

•    Graduated  or  progressed  rates p.  31,  sec.  14 

Tax  on  deficiency  in  reserves  of  Federal  Reserve  Ban',.-  against 

notes  must  be  added  to p.  22,  sec.  11    c) 

Discount  transactions  by  Federal  Reserve  Banks: 

Acceptances  to  furnish  dollar  exchange p.  30,  ■ 

Member  bank  acceptances p.  28,  sec.  13 

Member  bank  promissory  notes  secured  b)   eligible  paper p.  29 

Notes,  drafts,  and  bills  arising  out  of  actual  commercial  I 

tions— 90-day  maturjfy p.  27,  e 

Notes,    drafts,    and    bills    drawn    for    agricultural     purposes — 6 
months'  maturity p.  28,  sec.  13 


sec. 

25  (a) 

sec. 

25    a 

p.  5, 

sec.  2 

p.  5, 

sec.  2 

p.  5, 

sec.  2 

90  INDEX. 

Dissolution: 

Foreign  Banking  Corporations — 

Failure  to  comply  with  act p . 

Survival  of  remedies  and  penalties p. 

National  banks — 

Effect  of 

Failure  to  comply  with  act 

Survival  of  remedies  and  penalties 

District: 

Definition  of  term  "district" p.  3,  sec.  1 

Federal  Reserve.     (See  Federal  Reserve  district.) 
Dividends: 

Federal  Reserve  Banks p.  14.  sec .  7 

Foreign  Banking  Corporations,  declaration  of p.  58,  sec.  25  (a) 

Member  banks  not  to  pay  when  reserves  are  deficient p.  44,  sec .  19 

Division  of  earnings  of  Federal  Reserve  Banks p.  14,  sec.  7 

Dollar  exchange,  acceptance  by  member  banks  to  provide p.  30,  sec.  13 

E. 

Earnings  of  Federal  Reserve  Banks,  division  of p.  14 ,  sec .  7 

Edge  Act.     (See  Sec.  25  (a),  Federal  Reserve  Act.) 

Edge  corporations.     (See  Foreign  Banking  Corporations. ) 

Elections  of  directors  of  Federal  Reserve  Banks p.  10,  sec.  4 

Embezzlement  by — 

Officers,  directors,  agents,  or  employees  of  Federal  Reserve  Banks 

or  member  banks,  or  by  receivers  of  insolvent  national  banks. .  p.  79 
Officers,  directors,  agents,  clerks,  employees,  examiners,  or  re- 
ceivers of  Foreign  Banking  Corporations pp.  59,  60,  sec.  25  (a) 

Emergency  currency,  limitations  of,  act  of  May  30,  1908,  extended  to 
June  30,  1915 p.  61,  sec.  27 

Examinations: 

Expenses  of p.  17,  sec.  9;  p.  45,  sec.  21 

Federal  Reserve  Banks p.  21,  sec.  11  (a) ;  p.  45,  sec.  21 

Foreign  Banking  Corporations,  by  Federal  Reserve  Board p.  58,  sec.  25  (a) 

Member  banks,  by  Federal  Reserve  Board p.  21,  sec.  11  (a) 

Member  banks,  general  provision  concerning p.  17,  sec.  9;  p.  44,  sec.  21 

Special  examinations  by  Federal  Reserve  Bank  of  member  banks. .  p.   17,  sec.  9; 

p.  45.  sec.  21 
Special  examinations  of  foreign  branches  of  national  banks  and 

State  foreign  banking  corporations p.  50,  sec.  25 

State  member  banks pp.  17, 18;  sec.  9 

State  examinations  may  be  accepted p.  17,  sec.  9;  p.  44,  sec.  21 

Examiners: 

Accepting  loan  or  gratuity  prohibited p.  46,  sec.  22  (a) 

Appointment  of p.     44,  sec.  21 

Disclosure  of  confidential  information,  penalty p.  46,  sec.  22  (b) 

Disqualification  of p.  46,  sec.  22  (a) 

Loans  and  gratuities  must  no1  !>c  made  to p.  46,  sec.  22  i  a) 

Penalty  for  accepting  loan  < >r  gratuil  y p.  46,  sec.  22  I  a) 

Penalty  for  disclosure  of  confidential  information p.  46,  sec.  22  (a) 

Powers p.  45,  sec.  21 

Salary p.  45,  sec.  21 

Exception  to  limitation  on  total  outstanding  liabilities  of  national 

banks p.  29,  sec.  13;  p.  78 


1KDEX.  91 

Exchange  charges pp.  26,27,  sec.  L3 

Exchange  of  2  per  cent  gold  bonds  for  L-year  gold  notes  and  30-year  3 

per  cent  gold  bonds p.  II.  sec,  IS 

Exemption  of  Federal  Reserve  Banks  from  taxation p.  L5,  Bee.  7 

otion  of  notes  secured  by  Liberty  bonds  from  stamp  tax p.  82 

F. 

Raise  entryin  books  of  Foreign  Banking*  orporations,  penalty p- .'""■ 

Farm  land  banks p.  66 

lands,  loans  en p.  tS,  sec.  24 

Farm  Loan  Act p.  66 

Farm  loan  bonds,  Federal  Resen  e  Banks  may  invest  in p.  (j8 

Federal  Advisory  Council,  general  powers  and  dn1  tea  of. p.  26,  Bee.  L2 

Federal  Reserve  Agent: 

Appointment p.  11,  sec.  4 

•ht nuts p.  12.  sec.  4 

Bond p.  23,  sec.  LI  (i) 

Compensation p.  11,  sec.  4 

Deposits  by,  with  Federal  Reserve  Board  or  Treasurer  of  I'm 

States p.  r;6,  sec.  16 

Deposits  with,  Federal  Reserve  A  ct  requirement p.  36,  sec.  16 

Duties  in  general p.  U,  sec.  4 

Federal  Reserve  notes,  holding  money  for  redemption  of p.  36,  sec.  10 

Notice  to  board  of  issuance  and  withdrawal  of  Federal  Reserve 

notes p.  33,  sec.  16 

Qualifications p.  11,  see.  4 

Redeposit  of  money  with  Board  or  Treasurer p.  36,  sec.  16 

Reports  to  Federal  Reserve  Board p.  11,  sec.  4 

Federal  Reserve  bank  notes: 

Authorization  and  method  of  issue p.  9,  sec.  1 ;  p.  41,  sec.  18 

Denominations  of  $1  and  $2 p.  74 

Expenses  of  printing  and  issuing p.  38,  sec.  16 

General  provisions  concerning p.  9,  sec.  4 ;  p.  41 ,  sec.  18 

Issue p.  41,  see.  18;  p.  74 

Lien  on  assets  of  bank p.  35,  sec.  16 

Obligations  cf  Federal  Reserve  Bank p.  41 ,  sec  IS 

Redemption  of p.  41,  sec.  18 

Federal  Reserve  Banks: 

ice  of  chairman  or  deputy  chairman p.  11,  sec.  4 

ants  with  other  Federal  Reserve  Banks p.  32,  Bee.  I  I 

Advances  to  member  banks  on  15-day  promissory  notes p.  29,  sec.  13 

Administration  of  affairs  of,  must  be  lair  and  without  discrimina- 
tion to  member  banks ]>•  !»,  see.  4 

Alaska  and  dependencies  ami   possessions,  hanks  in  may  become 

nbers p    W,  sec.  lr> 

Application  for  stock  in p.7,sec.4;  p.  L3,sec.5;  p.  L6f 

asments  upon,  by  Federal  Reserve  Board  for  expenses p.  20,  sec.  L0 

Authority  to  commence  business p.  '•' 

Hoard  of  directors  (see  oho  Directors) p.  9,  sec.  4 

Branch  hanks P-  7,  sec.  3 

tl  stock,  amount  of  required p.  6, 

Certificate  to  commence  business p.  9,  see.  4 

Certifying  checks  drawn  against  insufficient  funds ]>.  78 

(  hairman  of  board  of  directors p.  1 1  ■  sec.  4 


92  INDEX. 

Federal  Reserve  Banks — Continued. 

Clearing  and   collection   charges  regulated   by  Federal   Reserve 

Board p.  38,  sec.  16 

Clearing  checks p.  38,  sec.  16 

Collection  charges  against,  prohibited p.  27,  sec.  13 

(  ollections p.  2G,  sec.  13 

( Jorporate  powers p.  8,  sec.  4 

Deficiency  in  reserves,  graduated  tax  upon p.  22,  sec.  11  (c) 

Definition  of  term  "reserve  bank  " p.  1 .  sec.  1 

Deposits p.  26,  sec.  13 ;  p.  71 

Deputy  chairman  of  board  of  directors p.  11,  sec.  4 

Directors.     (See  Directors.) 

Discount  of  paper  of  member  banks  Becured  by  bonds  of  War 

Finance  Corporation p.  70 

Disccunts  for  member  banks- 
General  provisions  concerning pp.  27,  28,  sec.  13 

Limitations  upon  for  any  one  borrower p.  18,  sec.  9; 

p.  25,  sec.  11  (m);  p.  28,  sec.  13 

Discrimination  for  or  against  member  banks  prohibited p.  9,  sec.  4 

Dividends p.  14,  sec.  7 

Division  of  earnings p.  14,  sec.  7 

Doubtful  assets,  Board  may  require  writing  off  of p.  23,  sec.  11  (g) 

Earnings,  distribution  of p.  14,  sec.  7 

Embezzlement,  etc.,  from p.  79 

Exemption  from  taxation p.  15,  sec.  7 

Farm-loan  bonds,  may  invest  in p.  67 

Fiscal  agents,  shall  act  as,  when  required p.  32,  sec.  15;  p.  71 

Forfeiture  of  membership  in p.  17,  sec.  9 

Foreign  accounts p.  32,  sec.  14 

Foreign  agencies p.  32,  sec.  14 

Foreign  Banking  Corporations  can  not  become  members  of p.  57,  sec.  25  (a) 

Franchise  tax p.  14,  sec.  7 

Government  depositories,  may  act  as p.  32,  sec.  15 

Insolvency  of p.  14,  sec.  7 

Member  banks,   information  to  be  furnished   Federal   Reserve 

Board  concerning  condition  of p.  45,  sec.  21 

Officers,  suspension  of,  by  Federal  Reserve  Board p.  23,  sec.  11  (f) 

Open-market  operations  (see  also  Federal  Reserve  Banks;  Powers),  p.  31,  sec.  14 

Organization p.  7,  sec.  4 

Powers p.  8,  sec.  4;  p.  26,  sec.  13;  p.  31,  sec.  14 

Advances  to  member  banks  on  15-day  promissory  notes p.  29,  sec.  13 

Discount  notes,  drafts,  and  bills  of  exchange pp.  27,  28,  30,  sec.  13 

Dollar  exchange,  discount  or  purchase  of  drafts  drawn  to 

furnish p.  30,  sec.  13 

Establish  discount  rates p.  31,  sec.  14 

Open-market  operations p.  31 ,  sec.  14 

Buy  and  sell  United  States  bonds  and  notes,  revenue 

bonds,  and  warrants p.  31,  sec.  14 

Buy  and  sell  bills  of  exchange  arising  out  of  commercial 

transactions p.  31,  sec.  14 

Buy  and  sell  cable  transfers,  bankers'  acceptances,  and 

bills  of  exchange p.  31,  sec.  14 

Deal  in  gold  coin  and  bullion p.  31,  sec.  14 

Open  accounts  in  foreign  countries  and  establish  agencies p.  32,  sec.  14 

Receive  items  for  deposit,  collection,  or  exchange,  p.  26,  sec.  13;  p.  38,  sec.  16 


INDEX.  03 

Federal  Reserve  Banks — Continued. 

Purchase  of  obligations  secured  I  of  War  Finance  I  orpo- 

rai  ion p.  70 

Purchase  of  bonds  bearing  circulation  privilege,  limitations  upon 

amount  in  any  one  year p.  in.  sec.  1 3 

Rediscounts.      S(    ' 

Sim, 

Special  examinations  ibers p.  45,  sec.  21 

Stock,     (See  Stock.) 

Supervision  by  Federal  Reserve  Board p.  23,  sec.  II  (j) 

Surplus  fund p.  14,  sec.  7 

Suspension  of  operations  of,  by  Fed eral  Reser .  e  !  !< >i  <•>] _  p.  23,  sec.  11  (h ) 

Suspension  or  removal  of  officers  and  d  irectors p.  23,  sec.  11  (f) 

Taxation,  exemption  from p.  15,  sec.  7 

War  Finance  Corporation — 

Deposit  of  funds p.  71 

Fiscal  agents  of p.  71 

Weekly  statement  of  condition  of,  by  Federal  Reserve  Board...  p.  22,  sec.  11  (a) 

Writing  off  doubtful  assets p.  23,  sec.  11  (g) 

Federal  Reserve  Board: 

Advice  and  assistance  of,  with  respect  to  loans  to  railroads  under 

Transportation  Act  of  1920 p.  83 

Allotment  of  refunding  bonds p.  40,  sec.  18 

Annual  report p.  21,  sec.  10 

Applications  for  cancellation  of  stock p.  1 7,  sec.  9 

Assessments  against  Federal  Reserve  Banks  to  pay  expenses p.  20,  sec.  10 

Chairman,  Secretary  of  Treasury  ex  officio p.  20,  sec.  10 

Clas3  C  directors,  appointment  of,  by p.  11,  sec.  4 

Clearing  house,  may  act  as p.  38,  sec.  16 

Deposits  with  Secretary  of  Treasury  subject  to  order  of p.  38,  sec.  16 

Designation  or  requirement  of  Federal  Reserve  Bank  to  act  as 

clearing  house p.  38,  sec.  16 

Ex  officio  members p.  19,  sec.  10 

Expenses p.  20,  sec.  10 

Expenses  of  handling  deposits  with  Secretary  of  the  Treasury p.  39,  sec.  16 

Expenses  of  money  shipments p.  39,  sec.  16 

Farm  loans,  limitations  on p.  48,  sec.  24 

Federal  Reserve  Agent,  appointment  of,  by p.  11,  sec.  4 

Federal  Reserve  notes,  regulation  of  issue p.  35,  sec.  1 6 

Governor,  appointment  and  duties p.  20,  sec.  10 

Insolvency  of    Foreign    Banking    Corporation,    appointment  of 

receiver  on p.  57,  sec.  25  i  a) 

Members p.  19,  sec.  10 

Appointment pp.  19,  20,  sec.  10 

Expenses pp.  19,  20,  sec.  10 

Ineligibility  of,  for  other  office  or  employment  in  member 
banks,  Federal  Reserve  Ban]  -   or  Foreign  Bankic 

rations p.  20,  sec.  JO;  p.  56,  sec.  25  (a) 

Qualifications pp.  L9,  20,  21,  sec.  L0;  p.  57,  sec.  25  (a) 

Salary pp.  19,  20,  sec.  10 

Term  of  office p.  20,  sec.  10 

Vacancies,  appointment  of,  by  President  to  fill p.  21,  sec.  10 

Organization  and  operation  of,  general  provisions  regarding.. pp.  L9,  20,  21,  sec.  10 
Permission  of,  to  serve  two  or  more  banks p.  65 


94  INDEX. 

Federal  Reserve  Board — Continued. 

Powers  of p.  21.  sec.  1 1 

Agricultural  paper,  may  fix  amount  which  a  Federal  Reserve 

Bank  may  discount p.  28,  sec.  1 3 

Character  of  paper  eligible  under  section  13  for  discount  with 

Federal  Reserve  Banks,  may  determine  and  define p.  27,  sec.  13 

Doubtful  or  worthless  assets,  may  require  writing  off p.  23,  sec.  11  (g) 

Employment  of  attorneys,  assistants,  etc p.  25,  sec.  11(1) 

Examination  of  accounts,  books,  affairs  of  Federal  Reserve 

Banks  and  member  banks p.  21,  sec.  11  (a) 

Federal  Reserve  notes,  supervise  issue  and  retirement  of .  .   p.  22,  sec.  11  (d) 
Fiduciary  powers    may  grant  to  national  banks  by  special 

permit p.  23,  sec.  11  (k) 

Rediscount  by  Federal  Reserve  Bank  of  member  banks'  paper 
of  any  one  borrower  in  excess  of  limitations  imposed  by  sec- 
tions 9  and  13,  may  permit p.  25,  sec.  11  (m) 

Rediscount  of  paper  of  other  Federal  Reserve  Banks,  may 

require p.  22,  sec.  11  (b) 

Reserve  requirements,  may  suspend  for  30  days;  tax  imposed 

on  suspension p.  22,  sec.  11  (c) 

Reserve  and  central  reserve  cities,  may  add  to  or  reclassify,  p.  22,  sec.  11  (e) 
Rules  and   regulations,  may  prescribe  (see  also  Rides  and 

Regulations) p.  23,  sec.  11  (i) 

Statements  and  reports,  general,  may  require p.  21,  sec.  11  (a) 

Statement  in  detail  of  each  Federal  Reserve  Bank;  shall  pub- 
lish each  week;  contents p.  22,  sec.  11  (a) 

Supervision  of  Federal  Reserve  Banks p.  23,  sec.  11  (j) 

Suspension  of  officers  or  directors  of  Federal  Reserve  Banks,  p.  23,  sec.  11  ( I) 

Powers  in  conflict  with  those  of  Secretary  of  Treasury p.  21,  sec.  10 

Railroads,  loans  to,  under  Transportation  Act  of  1920,  advice  and 

assistance  of,  in  respect  to p.  83 

Readjustment  of  districts p.  4,  sec.  2 

Rediscount  of  paper  discounted  by  Federal  Reserve  Banks,  may 

require p.  22,  sec.  11  (h) 

Regulations.     (See  Rules  and  Regulations.) 

Removal  of  Federal  Reserve  Bank  officers  or  directors p.  23,  sec.  11  (f) 

Report  of,  annual p.  21,  sec.  10 

Representatives  in  Congress  ineligible p.  10,  sec.  4 

Review  of  organization  committee's  determinations p.  3,  sec.  2 

Secretary  of  Treasury,  conflict  of  power  between  Secretary  and 

Federal  Reserve  Board p.  21,  sec.  10 

Senators  ineligible p.  10,  Bee.  4 

Staff,  employment  and  expenses  of p.  25,  sec.  11  (1) 

Supervision  of  Federal  Reserve  Banks p.  23,  sec.  11  (j) 

Supervision  of  foreign  accounts  of  Federal  Reserve  Banks p.  32,  sec.  i  1 

Suspension  of  resen  e  requirements p.  22,  sec.  11  (c) 

Trust  powers  granted  by p.  23,  sec.  11  (k) 

Vacancies,  how  filled p.  21,  sec.  10 

Vice  governor p.  20,  sec.  10 

Weekly  statement  of  condition  of  Federal  Reserve  Banks p.  22,  sec.  11  (a) 

Federal  Reserve  cities,  designation  of p.  3,  sec.  2 

Federal  Reserve  districts,  ereation,  apportionment,  and  readjustment 
of pp.  3,  4,  sec.  2 


INDEX.  95 

Federal  Reserve  notes: 

Additional  security  may  be  required p.  34,  Bee.  L6 

Application  for,  may  be  granted  in  whole  or  in  part pp.  33,  35,  Bee.  16 

Bonds  of  War  Finance  Corporation,  pa  per  secured  by,  as  collateral 

security  for  Federal  Reserve  notes p.  71 

Cancellation  and  destruction p.  35,  sec.  16 

Collateral  security |.  sec.  16;  p.  71 

Custody  pending  issue pp.  36,  37,  sec.  16 

Custody  of  plates  and  dies p.  37,  sec.  16 

Denominations  of p.  37,  sec.  16 

Description  of pp.  33,  3  !.  37,  sec.  16 

Deposits  against p.  35,  sec.  lti 

Deposits  with  Treasurer  to  cover  redemptions p.  34,  sec.  i  (I 

Discretion  of  Board  to  granl  application  for  issue pp.  33,  35,  sec.  1(5 

Distinctive  letter  and  number p.  34,  sec.  16 

Engraving  and  printing p.  37,  sec.  16 

Exchange  of,  for  gold  coin  or  bullion p.  31,  sec.  14 

Expenses  of  issue  and  retirement p.  37,  sec.  16 

Interest  on p.  35,  sec.  10;  p.  71 

Issue  of p.  22,  sec.  11 ;  pp.  33-38,  sec.  16 

Lien  on  assets  of  bank p.  35,  sec.  1 6 

Notice  to  Board  of  issues  and  withdrawals p.  33,  sec.  16 

Obligation  of  United  States p.  33,  sec.  16 

Paying  out  by  Federal  Reserve  Bank  other  than  issuing  bank, 

prohibited p.  34,  sec.  16 

Plates  and  dies p.  37,  sec.  16 

Power  of  bank  to  issue p.  9,  sec.  I 

Purposes  for  which  issued p.  33,  sec.  16 

Rate  of  interest  on p.  35,  sec.  16 

Redemption  of pp.  34,  36,  sec.  16 

Redemption  fund p.  35,  sec.  16 

Reduction  of  liability  for •. p.  35,  sec.  16 

Reserve  against,  what  may  be  counted  as pp.  34,  35,  39,  - 

Retirement  of p.  22,  sec.  11  (d);  pp.  34,  35,  36,  sec.  16 

Return  or  retirement  by  another  Federal  Reserve  Bank p.  34,  sec.  16 

Status  as  currency p.  33,  - 

Supervision  and  control  of  issue  and  retirement p.  22,  sec.  11  (d) 

Tax  on  deficiency  in  gold  reserve p.  22,  sec.  11  (c) 

Withdrawal  of  collateral p.  36,  sec.  16 

Fiduciary  powers  of  national  banks p.  23,  sec.  11    k  i 

Fiscal  agents  of  the  United  States: 

Federal  Reserve  Banks  shall  act  as p.  32,  sec.  15 

Foreign  Banking  *  Jorporations  shall  act  as p.  51,  see. 

Foreign  accounts,  Federal  Reserve  Banks p.  32,  sec.  14 

Foreign  agencies: 

Federal  Reserve  Banks p.  32,  sec.  14 

Foreign  Banking  Corporations p.  54,  sec.  25  i  a    (b) 

Foreign  banking  corporations,  national  banks  may  invest  in  stock  of.  p.  49,  50,  sec.  25 

Foreign  Banking  Corporations: 

Acceptances,  power  to  make p.  53,  sec.  25 

Agencies,  establishment  of  foreign p.  54,  sec.  25  (a)  (b) 

Banking  corporations,  foreign,  conversion  of,  into p.  59,  sec. 

Branches,  establishment  of  foreign p.  54,  see   25 


96  INDEX. 

Foreign  Banking  Corporations — Continued. 

Business  of,  can  not  carry  on  in  United  States  except  such  as  is 

incidental  to  foreign  business pp.  54,  55,  sec.  25  (a) 

Business,  permit  to  begin pp.  52,  55,  sec.  25  (a) 

<  lapital  stock — 

Increase  of p.  55,  sec.  25  (a) 

Method  of  payment p.  55,  sec.  25  (a) 

Minimum  required p.  55,  sec.  25  (a) 

Ownership  of  majority  of  shares p.  56,  sec.  25  (a) 

Clayton  Act,  application  of p.  56,  sec.  25  (a) 

Commerce  or  trade  in  commodities  prohibited  except  as  specifically 

provided;  penalty p.  55,  sec.  25  (a) 

Conversion  of  State  corporations  into p.  59,  sec.  25  (a) 

Corporate  existence,  extension  of p.  58,  sec.  25  (a) 

Deposits  in  United  States,  nature  of,  allowed p.  53,  sec.  25  (a)  (a) 

Directors- 
Clayton  Act,  applicability  of p.  56,  sec.  25  (a) 

Dividends,  declaration  of,  by 1 p.  58,  sec.  25  (a) 

Election  of p.  52,  sec.  25  (a) 

Liability  of,  in  personal  capacity  for  participation  in  violations 

of  act p.  57,  sec.  25  (a) 

Members  of  Federal  Reserve  Board  may  not  act  as p.  56,  sec.  25  (a) 

Qualifications,  must  be  citizens  of  United  States p.  52,  sec.  25  (a) 

Unlawful  acts  of,  penalties pp.  55,  59,  60,  sec.  25  (a) 

Dissolution  of p.  59,  sec.  25  (a) 

Dividends,  declaration  of p.  58,  sec.  25  (a) 

Embezzlement  of   funds  by   officers,    directors,    or   employees; 

penalty pp.  59,  60,  sec.  25  (a) 

Examination  of,  by  Federal  Reserve  Board p.  58,  sec.  25  (a) 

Extension  of  corporate  existence p.  58,  sec.  25  (a) 

False  entry  in  books  of,  penalty p.  60,  sec.  25  (a) 

Federal  Reserve  Board,  member  of  may  not  act  as  director  of. . .  p.  56,  sec.  25  (a) 

Foreign  branches  and  agencies,  establishment  of p.  54,  sec.  25  (a)  (b) 

Insolvency  of p.  57,  sec.  25  (a) 

Liabilities,  limitations  upon p.  53,  sec.  25  (a)  (a) 

Liability  of  directors  in  personal  capacity  for  participation  in  viola- 
tions of  act p.  57,  sec.  25  (a) 

Limitations  upon — 

Commerce  or  trade  in  commodities p.  55,  sec.  25  (a) 

Liabilities  outstanding p.  53,  sec.  25  (a)  (a) 

Ownership  of  stock  in  corporations  competing  "with p.  54,  sec.  25  (a)  (c) 

Ownership  of  stock  in  any  other  one  corporation p.  54,  sec.  25(a)  (c) 

Price  control  of  commodities  prohibited p.  55,  sec.  25  (a) 

Stock,  amount  of,  which  national  banks  may  invest  in p.  56,  sec.  25  (a) 

Total    liabilities,    of    all    classes,    subject   to   regulation   of 

Board p.  53,  sec.  25  (a)  (a) 

Loss  upon  debts  contracted  in  good  faith,  purchase  of  stock  in 

corporation  to  prevent p.  54,  sec.  25  (a) 

National  banks  may  invest  in  stock  of p.  56,  sec.  25  (a) 

Organization  of p.  51,  sec.  25  (a) 

Ownership  of  shares  of  stock p.  56,  sec.  25  (a) 

Ownership  of  stock  of  other  foreign  banking  corporations,  limita- 
tions upon p.  54,  sec.  25  (a)  (c) 


INDEX.  97 

Federal  Banking  Corporations— Continm  id. 
Penalties  and  forfeitures — 

Embezzlement  of  funds pp.  59,  60,  sec.  25  (a) 

Failure  to  comply  with  terms  of  act p.  57,  sec.  25  (a) 

False  entry  in  books p.  60,  sec.  25  (a) 

Representations  that  United  States  is  liable  for  obligations 

of p.  60,  sec.  25  (a) 

Unauthorized  issue  of  obligations  of p.  60,  sec.  25  (a) 

Permit  to  begin  business pp.  52,  55,  sec.  25  (a) 

Powers,  corporate p.  52,  sec.  25  (a) 

Powers  of— 

Establishment  of  foreign  branches  and  agencies p.  54,  sec.  25  (a)  (b) 

General  banking p.  53,  sec.  25  (a)  (a) 

Purchase  of  stock  in  other  corporations p.  54,  sec.  25  (a)  (c) 

Price  control  of  commodities  prohibited;  penalty p.  55,  sec.  25  (a) 

Purposes  of  corporation p.  51,  sec.  25  (a) 

Reports  to  Federal  Reserve  Board p.  58,  sec.  25  (a) 

Representations  that  United  States  is  liable  for  obligations  of; 

penalty p.  60,  sec.  25  (a) 

Reserves,  amount  required  against  deposits  in  United  States,  p.  53,  sec.  25  (a)  (a) 
Rules  and  regulations  of  Federal  Reserve  Board,  subject  to.  pp.  53,  54,  sec.  25  (a) 
Shareholders — 

Liability  of p.  57,  sec.  25  (a) 

Majority  of,  to  be  United  States  citizens p.  56,  sec.  25  (a) 

Meetings  of p.  58,  sec.  25  (a) 

Stock- 
National  banks  may  invest  in p.  56,  sec.  25  (a) 

Ownership  of  majority  of  shares  of p.  56,  sec.  25  (a) 

Taxation  of p.  58,  sec.  25  (a) 

Transfer  of p.  52,  sec.  25  (a) 

Surplus  fund p.  58,  sec.  25  (a) 

Taxation  of p-  58,  sec.  25  (a) 

Unauthorized  issue  of  obligations  of;  penalty p.  60,  sec.  25  (a) 

Foreign  branches  of  national  banks,  general  provisions  concerning,  pp.  49,  50,  sec.  25 

Foreign  exchange,  restrictions  on  transactions  in p.  75 

Forfeitures.     (See  Penalties  and  forfeitures.) 

Franchise  tax  on  Federal  Reserve  Banks p.  14,  sec.  7 

G. 

Gold,  export,  hoarding,  melting,  or  earmaking  of p.  75 

Gold  reserve: 

Secretary  of  Treasury  to  maintain p.  61,  sec.  26 

Tax  on  deficiency p.  22,  sec.  11  (c) 

Gold  settlement  fund pp.  38,  39,  sec.  16 

Gold  supply,  act  to  conserve p.  72 

Government  deposits: 

In  farm  land  banks p.  67 

In  Federal  Reserve  Banks p-  32,  sec.  15 

In  foreign  countries p.  70 

In  joint-stock  land  banks p.  67 

In  member  banks P-  32,  sec.  15 

Nature  of  permitted  in  Federal  Reserve  Banks p.  32,  sec.  15 

Postal  savings  funds P-  32,  sec.  L5;  p.  66 

Proceeds  of  sales  of  bonds  and  certificates  of  indebtedness j>]>.  68,   69 

Graduated  discount  rates P-  31,  sec.  14 

8881°— 20 7 


98  INDEX. 

I. 

Inconsistent  laws  repealed p.  61,  sec.  26 

Insolvency  of  Foreign  Banking  <  'orporat  ions p.  57,  sec.  25  (a) 

Insular  possessions,  national  banks  in,  may  remain  nonmembers p.  44,  sec.  19 

Insurance  agents,  national  banks  may  act  as p.  30,  sec.  13 

Interlocking  bank  directorates p.  64 

Interest  rates.     (See  Discount  and  interest  rates.) 

Invalidity  of  part  of  act  not  to  invalidate  all p.  63,  sec.  29 

Investment  by  national  banks  in  foreign  banking  corporations p.  49,  sec.  25 

K. 

Kem  Amendment,  Clayton  Anti-Trust  Act,  as  amended  by p.  65 

L. 

Liabilities  of  Foreign  Banking  Corporations,  limitations  upon.,  p.  53,  sec.  25  (a)  (a) 

Liabilities  of  national  banks,  limitation  upon p.  77 

Liberty  bonds,  deposits  of  proceeds pp.  68 .  69 

Liberty  bonds,  rediscount  of  paper  secured  by p.  25,  sec.  11  (m) 

Liberty  Bond  Acts: 

First p.  68 

Second p.  69 

Third p.  69 

Lien  on  assets  of  Federal  Reserve  Banks  to  secure  Federal  Reserve 

notes p.  35,  sec.  I  <; 

Limitations  upon : 

Acceptances   to   furnish   dollar  exchange p.  30,  sec  13 

Acceptances  by  member  banks  for  any  one  person p.  28,  sec  13 

Deposits  by  member  banks  with  nonmember  banks p.  43,  sec.  19 

Exceptions  on  limitations  of  total  liabilities  of  national  banks,  p.  29,  sec.  13;  p.  78 
Foreign  Banking  Corporations.     (See  Foreign  Banking  Corpora- 
tions: Limitations  upon.) 

National  banks,  indebtedness  of p.  29,  sec.  13 ;  p.  78 

National  banks,  loans  by,  to  one  person,  firm,  corporation,  etc.. .  p.  77 

National  banks,  loans  by,  on  farm  and  real  estate p.  48,  sec.  24 

Rediscount  by  Federal  Reserve  Bank  of  paper  of  any  one  borrower .      p.  18,  sec.  9 ; 

p.  25,  sec.  11  (m);  p.  28,  sec  13 

State  banks,  rediscounts  for,  by  Federal  Reserve  Banks p.  18,  sec.    9 

Ijoans : 

Commission  for  procuring,  prohibited p .46,  sec.  22  (c) 

Examiners p.  46,  sec.  22  (a) 

Farm  lands p.  48,  sec.  24 

Real  estate p.  18,  sec.  24 

Trust  funds,  to  officers,  directors,  and  employees  of  national  banks, 
prohibited p.  24,  sec.   11   (k) 

M. 

Member  banks: 

Acceptances  by pp.  28,  30,  sec    13 

Advances  to  on  15-day  promissory  notes p.  29,  sec.  13 

Annual  reports  by  State  member  banks p.  17,  sec  9 

Application  for  stock  in  Federal  Reserve  Banks p.    7,    sec      ! ; 

p.  13,  sec.  5;  p.  16,  sec.  9 
Cancellation  of  stock  in  Federal  Reserve  Banks  upon  insolvency.      p.  14,  sec.  6 
Certification  of  checks  drawn  against  insufficient  funds,  illegality 
of p.  19,  sec  9;  p.  78 


INDEX.  99 

Member  banks — Continued. 

Deficiencies  in  reserves  of p.  43,  sec.  19 

Definition  of  term  "member  bank" p.  3,  sec.  I 

Deposits  of  Federal  land  banks ]>.  67 

Deposits  of.  with  nonmember  banks,  limitations  upon p.  43,  sec  L9 

Deposits  of  War  Finance  Corporation p.  71 

I  tiscounte  for pp.  27,  28,  sec.  13 

Discounts,  procuring  by  bribery,  illegality  of p.  46,  sec.  22  (c) 

Dollar  exchange p.  30,  sec.  13 

Embezzlement,  etc.,  from p.  79 

Examinations  of,  by  Federal  Reserve  Board p.  44,  sec.  21 ;  p.  21,  sec.  11  (a) 

Exchange  charges,  may  make  reasonable p.  27,  sec.  13 

Farm  loan  bonds,  may  deal  in p.  68 

Fees  or  commissions  to  officers  or  directors  for  loans  prohibited.  .  p.  46,  sec.  22  (c) 

Forfeiture  of  membership p.  1 7,  sec.  9 

Increasing  capital  stock  must  increase  holdings  of  Federal  Reserve 

Bank  stock p.  13,  sec.  5 

Insolvency 14,  sec.  6 

Interest  on  deposits  of  officers,  directors,  or  employees p.  47,  sec.  22  (e^ 

Limitations  on  amount  of  deposits  with  nonmember  banks p.  43,  sec.  19 

Loans  or  gratuities  to  bank  examiners  prohibited p.  46,  sec.  22  (a) 

National  banks,  limitation  on  total  indebtedness;  exceptions,  p.  29,  sec.  13;  p.  78 
Nonmember  banks  shall  not  act  as  medium  for,  in  securing  dis- 
counts      p.  43,  sec.  19 

Officers  and  employees  may  serve  foreign  branches p.  51,  sec.  25 

Promissory  notes,  15-day,  secured  by  paper  eligible  for  rediscount,     p.  29,  sec.  13 

Purchases  from  directors p.  47,  sec.  22  (d) 

Reports  by  State  member  banks,  penalty  for  failure  to  render,  pp.  16,  17,  sec.  9 
Reserve  balance,  may  be  checked  against;  limitations  imposed . . .     p.  43,  sec.  19 

Reserve  requirements p.  42,  sec.  19 

Reserves,  shall  not  make  new  loans  when  not  maintained p.  44,  sec.  19 

Sale  of  bonds  securing  notes  to  be  retired p.  40,  sec.  18 

State  banks  as  members,  general  provisions  concerning pp.  16-19,  sec.  9 

Stock  in  Federal  Reserve  Banks  not  to  be  transferred p.  13,  sec.  5 

Surrender  of  stock  in  Federal  Reserve  Banks — 

Rights,  privileges,  etc.,  cease  upon p.  18,  sec.  9 

When  required p.  13,  sec.  5 

Yisitorial  powers  to  which  subject 45,  sec.  21 

N. 
National  banks: 

Agent  for  fire  and  life  insurance  and  for  procuring  loans  on  real 

estate:  Limitations  upon p.  30,  sec.  13 

Administrator,  may  act  as p.  23,  sec.  11  (k) 

Application  for  stock  in  Federal  Reserve  Bank p.  7,  sec.  4;  p.  16,  sec.  9 

Bond-deposit  requirements  repealed p.  39,  sec.  17 

Bonds  of,  when  acting  in  fiduciary  capacities p.  24,  sec.  11  (k) 

Brokers  to  procure  real  estate  loans,  may  act  as p.  30,  sec.  13 

Capital  and  surplus  necessary  to  establish  trust  department p.  25,  sec.  11  (k) 

(  ommittees  of  estates  of  lunatics,  may  act  as p.  23,  sec.  11  (k) 

Conversion  of  State  banks  into p.  15,  sec.  8 

Definition  of  term  "  National  bank  " p.  3,  sec.  1 

Deposits  of  securities  with  State  authorities p.  24,  sec.  11  (k) 

Deposits  of  trust  funds p.  24,  sec.  11  (k) 

Dissolution  for  noncompliance  with  Act p.  5,  sec.  2 


100  INDEX. 

National  banks— Continued. 

Executor,  may  act  as p.  23,  sec.  11  (k) 

Failure  to  accept  terms  of  act,  penalty p.  5,  sec.  2 

Failure  to  become  member  bank,  penalty p.  5,  sec.  2 

Federal  Reserve  Banks,  subscription  to  stock  of,  method  of  pay- 
ment   p.  4,  sec   2   p.  IS,  sec.  5;  p.  16,  sec.  9 

Fiduciary  powers p.  23,  ser.  11  (k) 

Foreign    Banking   Corporation,    national   banks   may   invest   in 

stock  of p.  56,  sec.  25  (a) 

Foreign  banking  corporation,  directors  may  act  as  directors  in p.  51,  sec.  25 

Foreign  branches.     (See  Foreign  branches  i p.  49,  sec.  25 

Funds  held  in  trust p.  24,  sec.  11  (k) 

Guardian,  may  act  as p.  23,  sec.  11  (k) 

Indebtedness  limited:  exceptions p.  29,  sec.  13:  p.  78 

Insular  possessions,  national  banks  in,  may  remain  nonmembers. .     p.  44,  sec.  19 

Insurance  agent  or  broker,  may  act  as p.  30.  sec.  13 

Interlocking  directorates p.  51,  sec.  25:  p.  64 

Investment  of,  in  foreign  banking  corporations p.  49,  sec.  25 

Lien  to  secure  trusts p.  24.  sec.  11  (k) 

Limitation  on  total  indebtedness  of p.  29,  sec.  1 3 

Loans  of  trust  funds  to  officers,  directors,  or  employees p.  24,  sec.  11  (k) 

Loans  on  farm  lands  and  real  estate p.  48,  sec.  24 

Loans  to  one  person,  firm,  corporation,  etc p.  77 

Oath  as  fiduciary p.  24,  sec.  11  (k) 

Penalty  for  failing  to  accept  terms  of  Act p.  5,  sec.  2 

Personal  liability  of  stockholders .    p.  48,  sec.  23 

Personal  liability  of  directors  for  noncompliance  with  the  Act p.  5,  sec.  2 

Receiver,  may  act  as p.  23,  sec.  11  (k) 

Redemption  fund  for  note  reserve,  repealed p.  44,  sec.  20 

Reduction  of  capital  stock p.  62,  sec.  28 

Registrar  of  stocks  and  bonds,  may  act  as p.  23,  sec.  11  (k) 

Segregation  of  assets  'when  operating  trust  department p.  23,  sec.  11  (k) 

Stockholders  liability  for  debts  of p.  48,  sec.  23 

Subscription  to  capital  stock  of  Federal  Reserve  Banks,  method 

of  payment p.  4,  sec.  2:  p.  13,  sec.  5:  p.  16,  sec.  9 

Survival  of  remedies  and  penalties  againsl p.  5,  sec.  2 

Time  deposits,  may  receive  and  pay  interest  on p.  48,  sec.  24 

Transfer  of  shares  before  failure p.  48,  sec.  23 

Trust  department p.  23,  sec.  II  (k) 

National  banking  association,  definition  of  term p.  3,  sec.  1 

Nonmember  banks,  limitations  upon  amount  of  deposits  with p.  43,  sec.  19 

Nonmember  banks,  member  bank  shall  not  act  as  medium  for  in 

securing  discounts p.  43,  sec.  19 

Notes.     (See.  Federal  Reserve  notes:  Federal  Reserve  bank  notes.) 

(). 

Open-market  operations,  general  provisions  concerning p.  31,  sec.  14 

Organization  committee.     (See  Reserve  Bank  organization  committee.  | 
Organization  of: 

Federal  Reserve  Banks p.  7,  sec.  4 

Federal  Reserve  Board pp.  19,  20,  21,  sec.  10 

Foreign  Banking  ( 'orporations p.  51,  sec.  25  (aj 


INDEX.  101 

P. 

Penalties  and  forfeitures: 

Certifying  checks  drawn  against  insufficient  funds p.  19,  sec.  9;  p.  78 

Deficient  reserves  of  Federal  Reserve  Banks p.  22,  sec.  1 1  (c) 

Discounts,  procuring  by  bribery p.  46,  sec 

Embezzlement  from  Federal  Reserve  Banks  or  member  hanks.  .  .  p.  7!) 

Examiners — 

Accepting  loans  or  gratuities p.  46,  sec.  22  (a) 

Disclosing  confidential  information p.  4G,  sec.  22  (b) 

Foreign  Banking  Corporations.     (See  Foreign  Banking  Corpora- 
tion; Penalties  and  forfeitures.) 
Loans  by  trust  department  of  national  banks  to  officers,  directors, 

etc.,  prohibited p.  24,  sec.  11  (k) 

Paying  out  notes  of  one  Federal  Reserve  Bank  by  another p.  34,  sec.  16 

State  member  bank  reports,  failure  to  make p.  16.  sec.  9 

Survival  of  remedies  against  dissolved  corporations  on  account  of.         p.  5,  sec.  2 

Violations  of  Act p.  5,  sec.  2 

Pittman  Act p.  72 

Postal  Savings  Act,  amendment  to p.  66 

Postal  savings  funds,  deposit  of p.  66 

Powers  of    Federal    Reserve    Board.     (See   Federal    Reserve   Board, 
Powers  of.) 

Powers  of  Foreign  Banking  Corporations pp.  52,  53,  54,  sec.  25  (a) 

Private  bankers,   eligibility  of,  as  directors  of   member  banks  and 

Foreign  Banking  Corporations p.  65 

Progressive  discount  rates p.  31,  sec.  14 

Promissory  notes  of  member  banks,  advances  on p.  29,  sec,  13 

Public  moneys: 

Deposit  in  Federal  land  banks  and  joint-stock  land  banks p.  67 

Deposit  in  foreign  countries p.  70 

Reserves  against pp.  68,  69 

Public  stock  of  Federal  Reserve  Banks p.  5,  6,  sec.  2 

Purposes  of  Foreign  Banking  Corporations p.  51,  sec.  25  (a ) 

R. 

Railroad  loans,  advice  and  assistance  of  Federal  Reserve  Board  as  to . . .  p.  83 

Rates  of  discount  and  interest.     (See  Discount  and  interest  rates.) 
Real  estate  loans: 

National  banks  may  make p.  48,  sec.  24 

National  banks  may  act  as  brokers  to  procure 30,  sec.  13 

Receivers  of  insolvent  national  banks,  embezzlement,  etc. ,  by p.  80 

Redemption  fund  for  Federal  Reserve  notes p.  35,  sec.  16 

Rediscounts  (see  also  Discounts): 

Acceptances p.  28,  sec.  13 

Agricultural  paper p.  27,  sec.  13 

Discounted  paper  of  other  Federal  Reserve  Banks p.  22,  sec.  11  (b) 

Limitations  on  amount  discounted  for  any  one  borrower p.  18,  sec.  9; 

p.  25,  see.  II  (in);  p.  28,  sec.  13 

Paper  secured  by  bonds  of  War  Finance  Corporation p.  70 

Paper  secured  by  Liberty  bonds  or  certificates  of  indebtedness,  p.  25,  see.  II    m) 

Paper  subject  to pp.  27-28,  sec.  13 

Regulation  by  Federal  Reserve  Board p.  22,  sec.  11  (b);  p.  27,  sec.  13 

Suspension  of  limitations  as  to  paper  secured  by  Liberty  bonds  or 
certiticates  of  indebtedness p.  25,  sec.  II    m) 


102  INDEX. 

Refunding  bonds p.  40,  sec.  18 

Remedies,  survival  against  dissolved  bank p.  5,  sec.  2 

Repayment  of  deposits  upon  withdrawal  of  State  banks p.  18,  sec.  9 

Repeal,  right  to  amend,  alter,  or  repeal  expressly  reserved. p.  63,  sec.  30 

Reports  by : 

Federal  Reserve  Board.     (See  Federal  Reserve  Board.) 

Foreign  Banking  Corporations p.  58,  sec.  25  (a) 

State  member  banks pp.  16,  17,  sec.  9 

Reserves : 

Banks  in  Alaska,  dependencies,  or  possessions p.  44,  sec.  19 

Deposit  of  public  moneys pp.  68,  69 

Federal  Reserve  Bank — 

Against  deposits ^. pp.  34,  39,  sec.  16 

Against  Federal  Reserve  notes pp.  34,  35,  39,  sec.  16 

Gold  deposited  as  collateral  for  notes  may  be  counted  as 

part  of p.  34,  sec.  16:  see  p.  36,  sec.  16 

( iold  redemption  fund  may  be  counted  as  part  of p.  35,  sec.  16 

Gold  settlement  fund  may  be  counted  as  part  of p.  39,  sec.  16 

Tax  upon  delinquencies p.  22,  sec.  11  (c) 

Foreign  Banking  Corporations,  reserves  against  deposits  received 

in  United  States p.  53,  sec.  25  (a) 

Member  banks — 

Computation  of  balances p.  44,  sec.  19 

!  H'posits  of  public  moneys p.  68,  69 

Reserve  requirements pp.  42,  43,  sec.  19 

Suspension  of  reserve  requirements  by  Federal  Reserve  Board,  p.  22.  sec.  11  (c) 

Reserve  bank,  definition  of  term p.  3,  sec.  1 

Reserve  Bank  Organization  Committee pp.  3,  4,  5,  6,  sec.  2;  pp.  7,  12,  sec.  4 

Reserve  and  central  reserve  cities: 

Classification  by  Federal  Reserve  Board p.  22,  sec.  11  (e);  p.  48,  sec.  24 

Previous  status  not  changed p.  6.  sec.  2 

Revenue  Act  of  1918 p.  80 

Revised  Statutes,  United  States.     (See  Acts  amended,  etc.  i 
Rules  and  regulations,  Federal  Reserve   Board   authorized  to  make 
concerning — 

Acceptances  by  member  banks,  limitations  on  aggregate  amount 

of,  may  be  partially  waived p.  29,  sec.  13 

Agreements    by    State    foreign    banking    corporations    in    which 

national  banks  hold  stock p.  50,  sec.  25 

(  barges  for  collections p.  27,  sec.  13;  p.  38,  sec.  Hi 

( lharacter  of  paper  eligible  under  section  13  for  rediscount p.  27,  sec.  13 

Dollar  exchange:  drafts  drawn  for  the  purpose  of  furnishing p.  30,  sec.  13 

Federal  Reserve  Banks — 

Discount  and  rediscount  and  purchase  and  sale  of  bills  receiv- 
able, bills  of  exchange  and  acceptances p.  29,  sec.  13 

<  •  iterations  of  Branches  of p.  7,  sec.  3 

Transfer  of  stock  of P-  6,  sec.  2 

Federal  reserve  notes,  gold,  etc.,  deposited  with  Federal  Reserve 
Agents  and  held  jointly  by  such  agents  and  Federal  Reserve 

Bank .- p.  36,  sec.  16 

Foreign  agencies  of    Federal  Reserve  Banks,  other  Federal  Re- 
serve Banks  may  transact  business  through p.  32,  sec.  14 

Foreign  accounts  and  agencies  of  Federal  Reserve  Banks p.  32,  sec.  14 

Foreign  Banking  ( lorporations,  powers  of p.  53,  sec.  25  (a) 


INDEX.  103 

Rules  and  regulations,  Federal  Reserve  Board  authorized   to  ma 
concerning — <  'ontinued . 

General  authority  to  make I>.  23,  see   II  (i) 

National  banks,  operation  of  foreign  branches  and    purchase  of 

stock  in  foreign  banking  corporal  ions p.  -I!),  see.  25 

Open-market  operations — 

Purchase  and  sale  of  eligible  paper l>.  31 .  see.  i-i 

Purchase  of  United  States  bonds  and  notes  and    municipal 

warrants p.  31,  Bee.  I  I 

Reserve  balances  of  member  banks  may  be  checked  against  and 

withdrawn p.  43. 

Substitution  of  collateral  against  Federal  Reserve  notes p.  36,  see    it, 

Transfer  of  funds  between  Federal  Reserve  Banks p.  38,  see.  it; 

S. 

Salaries  of  Board's  employees,  etc.,  shall  be  fixed  in  advance i>.  25,  sec.  li     h 

Secretary  of  Treasury : 

Deposits  with,  by  Federal  Reserve  Bank  or  Agent ]>.  38,  see    Hi 

Ex  officio  member  of  Federal  Reserve  Board p.  19,  sec.  10 

Gold  reserve  to  be  maintained  by p.  61,  sec.  26 

Management  of  United  States  stock p.  6,  Bee.  2 

Shareholders,  individual  liability  for  debts  of: 

Federal  Reserve  Banks p.  4,  sec.  2 

Foreign  Banking  Corporations.     (See   Foreign   Banking   Corpora- 
tion; Shareholders.) 

National  banks p.  48,  sec.  23 

Silver  coinage p.  72 

Silver  export p.  75 

Stamp  taxes p.  80 

State  banks : 

Annual  report  of  member  banks pp.  16,  17.  see.  9 

Application  for  stock  in  Federal  Reserve  Banks,  method  of  pay- 
ment     ]>.  13.  sec.  5;  p.  16,  sec.  i) 

Cancellation  of  stock  in  Federal  Reserve  Banks p.  17   sec.  9 

Certification  of  checks  against  insufficient  funds,  illegality  of.    p.  L9,  sec.  9;  p.  78 

Conversion  of  into  national  banks p.  15,  sec.  8 

Eligibility  for  membership p.  16,  sec.  9 

Examination  (see  also  Examinations) p.  17,  sec.  9;  p.  21,  sec. 

II  (a);  p.  11.  sec.  21 

Examinations,  not  subject  to  requirements  of  section  2] p.  L8,  see.  9 

Membership  in  Federal  Reserve  System — 

Conditions  of  membership pp.  16,  17.  18,  sec.  9;  p.  13  sec.  5 

Forfeiture  of  membership p.  17.  Bee.  9 

Qualifications  for pp.  H>.  18,  see.  9 

Withdrawal  from  membership p.  17,  see.  9 

Reorganization  of  into  national  banks p.  15,  sec.  8 

Reports  of  condition  of P-  16,  see.  9 

Retention  of  powers  under  State  charters p.  L8,  sec.  9 

State  examinations  may  be  accepted p.  17,  see.  9;  p.  II.  Bee.  23 

Subject  to  provisions  and  penalties  of  Revised   Statutes  5209, 

upon  becoming  members p-  !,».  Bee.  9 

Subject  to  reserve  requirements  on  becoming  members p.  Hi.  see.  it 


]  04  INDEX. 

State  banks — Continued. 

Subject  to  sections  of  Federal  Reserve  Act  applicable  to  member 

banks;  but  not  subject  to  section  21 p.  18,  sec.  9 

Subscription  to  stock  in  Federal  Reserve  Banks p.  1 6,  sec.  9 

Withdrawal  from  membership,  condition  of p.  17,  sec.  9 

Stock: 

Federal  Reserve  Banks — 

Application  by  new  members  for  stock  of  subsequent  to  or- 
ganization of  system p.  13,  sec.  5;  p.  16,  sec.  9 

Calls  on  subscriptions p.  4,  sec.  2 

Cancellations,  limitation  on,  in  any  one  year p.  17,  sec.  9 

General  provisions  concerning p.  13,  sec.  5 

Increase  and  decrease  of p.  13,  sec.  5 

Insolvency  of  member  bank,  cancellation  of  stock  held  by. . .  p.  14,  sec.  6 

National  banks  must  subscribe p.  4,  sec.  2 

New  members,  subscription  to  stock  of  required p.  IS,  sec.  5 

Public  stock — 

Limitations  on  holding '  p.  6,  sec.  2 

Subscription  to p.  5,  sec.  2 

Reduction  in p.  14,  sec.  6 

Shares  owned  by  member  banks  not  to  be  transferred p.  13,  sec.  5 

Subscription  to — 

By  national  banks p.  4,  sec.  2;  p.  7,  sec.  4 

By  public p.  5,  sec.  2 

By  State  banks p.  16,  sec.  9 

Payment  on p.  4,  sec.  2;  p.  13,  sec.  5;  p.  16,  sec.  9 

Surrender  of,  upon  reduction  of  capital  or  liquidation  of  mem- 
ber banks p.  13,  sec.  5 

Transfer  of,  restriction  upon p.  6,  sec.  2 

United  States  stock p.  6,  sec.  2 

Voting  power p.  6,  sec.  2 

Foreign  Banking  Corporations.     (See  Foreign  Banking  Corpora- 
tions; Capital  stock;  Stock.) 
Member  banks — 

Increase p.  13,  sec.  5 

Reduction p.  13,  sec.  5 

National  banks — 

Reduction p.  62,  sec.  28 

Transfer  of,  before  failure p.  48,  sec.  23 

Stockholders.     (See  Shareholders.) 
Subtreasuries: 

Abolishment  of,  under  Appropriation  Act  of  1920 p.  82 

Certain  functions  transferred  to  Federal  Reserve  Banks p.  82 

Suspension  of  officers  and  directors  of  Federal  Reserve  Banks p.  23,  sec.  11  (f) 

Suspension  of  operations  of  Federal  Reserve  Banks p.  23,  sec.  11  (h) 

Surplus  fund: 

Federal  Reserve  Banks p.  14,  sec.  7 

Foreign  Banking  Corporations p.  58,  sec.  25  (a) 

T. 

Tax,  stamp p.  80 

Tax  upon  delinquencies  in  reserve p.  22,  sec.  1 1  (c) 

Taxation: 

federal  Reserve  Banks  exempt  from p.  15,  sec.  7 

Foreign  Banking  Corporations  subject  to p.  58,  sec.  25  (a) 


INDEX.  105 

Time  deposits,  delinition  of p    12,  sec.  19 

Trade  acceptances,  rediscount  of  by  Federal  Reserve  Banks p.  28,  ee<     L3 

Trading  with  the  Enemy  A<  i p.  75 

Transportation  Act  of  L920,  advice  and  assistance  of  Federal   Resi 

Board  with  respect  to  loans  to  railroads p.  83 

Trust  powers  of  national  banks p,  23,  sec.  |  |  (k) 

Two  per  cent  gold  bonds  exchangeable  for  one-j  ear  gold  notes  and 

j  ear  3  per  cent  gold  bonds p.  II.  sec.  18 

U. 

United  States  bonds  and  notes: 

I-oans  to  member  banks  on  security  of p.  29,  - 

Purchase  of,  by  Federal  Reserve  Banks p.  31,  sec.  14  (b) 

Rediscounts  of  paper  secured  by p.  27,  sec.  13 

United  States  stock p.  6,  sec.  2 

V. 

Validity  of  certified  checks  drawn  against  insufficient  funds p.  78 

W. 

War  Finance  <  orporation: 

Bonds,  purchase  and  discount  by  Federal  Reserve  Banks  of  obli- 
gations secured  by p.  70 

Deposits  of  funds  with  Federal  Reserve  Banks  and  member  banks.  p.  71 

Fiscal  agents.  Federal  Reserve  Banks  as,  for p    71 

War  Finance  Corporation  Act p.  70 

War-stamp  taxes p.  80 

o 


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